Business Startup

Checklist for Forming a Washington Corporation

A few weeks back, we provided a checklist for forming an LLC. In today’s post we’ve highlighted the key issues you’ll want to consider when forming a Washington corporation.

  • Check the Business Name. As we mentioned with LLCs, you’ll want to make sure the name you want for your corporation isn’t already registered with the Secretary of State (which you can check here). For corporations, you’ll need to include some reference to the fact that the company is a corporation, such as “Inc.” “Corp.” or “Co.”
  • Articles of Incorporation. The “Articles of Incorporation” is the document you file with the Secretary of State in order to form your corporation. This document must include (at the bare minimum) the name of the corporation, the number and type of authorized shares, the effective date of the incorporation, the duration or term the corporation is going to exist (almost always “perpetual”), the name and address of the registered agent, and the name and address of the incorporator­—the “incorporator” is the individual that signs the Articles of Incorporation, usually one of the founders. You can file these electronically, although we generally recommend drafting your own Articles that include additional provisions to protect the shareholders and directors from liability and to position the company to be more attractive to investors (if you plan to raise “outside” financing in the future).
  • Initial Report. The newly formed corporation must file an initial report with the Secretary of State within 120 days of being formed. The initial report includes the names and addresses of the directors and officers of the company.
  • Action of the Incorporator. The action of the incorporator is a document signed by the incorporator that lays out the initial actions the incorporator takes prior to the corporation being formed, including electing the company’s initial directors (if they haven’t been elected in the Articles). The incorporator also usually resigns from his or her title of “incorporator” in this document, which is important because if the incorporator does not resign they would still have authority to act on behalf of the corporation and may be open to unnecessary liability.
Building a house
  • Initial Board Consent. Washington requires a newly formed corporation to hold an organizational meeting to appoint officers, adopt bylaws, and conduct any other initial business that requires the directors’ attention. Typically, the directors will approve the different formation activities in a written board consent (if no meeting is held) or in meeting minutes (if a meeting is held). The bylaws lay out the general framework for how the corporation will be managed and what rights and responsibilities the different individuals have within the corporation (directors, officers, shareholders). These bylaws are usually adopted by the board of directors in the initial board consent.
  • Founder Stock Purchase Agreements. Typically the initial founders of the company will receive common stock shortly after the corporation is formed. We prefer to document the issuance of common stock to the founders in a stock purchase agreement. In the initial board consent, the board generally approves issuing stock to the founders and gives the officers the authority to execute a stock purchase agreement with each founder to document the stock issuance.
  • Stock Register. Many business attorneys will still recommend issuing paper stock certificates and keeping a record of those certificates. We generally advise not using paper stock certificates, because certificates often get lost, it’s a waste of paper, and there’s a more efficient way to keep track of shareholders and shares. Instead, we generally advise maintaining a simple stock register, which is often an excel spreadsheet that includes the names of the shareholders, number and type of shares each owns, and the date the shares were issued. This stock register is updated whenever there’s a new stock issuance, signed by two officers, and distributed to the existing shareholders.
  • Master Business License. If your corporation is going to be “doing business” in Washington, then you’ll need to register the business with the Department of Revenue by filing an application for a master business license. You can do that online here.
  • Local Business Licenses. Depending on where you are located, you may need to register your corporation with the city by filing an application for a city business license. Licensing requirements vary from city to city and depending on the type of business you’re operating.
  • Tax ID (EIN). In order to open up a business bank account, you’ll need to file an application with the IRS to obtain an employer identification number for your corporation. You can that online here.

The checklist above includes the initial steps you should consider when forming a new corporation. Each company is unique and may require additional steps to be set up properly.

If you have any questions about the information above or about forming your own corporation, contact us today.

PhotoGarreth Wilcock | Flickr


Gavin Johnson

Gavin enjoys craft beer and is learning the art of brewing.

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