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...

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Business Startup

Can You Convert Your Company Into a Social Purpose Corporation?

Yes, an existing Washington business entity can convert into a social purpose corporation (“SPC”). In this blog post, we’ll discuss how an existing traditional corporation can become a social purpose corporation.

To convert a corporation into an SPC, the company needs to take a few steps. First, the board of directors has to recommend the corporate action to the shareholders. The action must pass by at least two-thirds of the votes of the voting group entitled to vote on the corporate action. Further, the action must pass by two-thirds of all other shares voting as separate voting groups. Essentially, the SPC conversion statute controls over any existing arrangement in the corporation’s governing documents. So the corporate action to convert to an...

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Business Startup

Why You Should Consider a Social Purpose Corporation When Choosing Your Business Entity Type

Prior to the emergence of the Washington social purpose corporation (“SPC”) and similar corporate forms in other states, entrepreneurs who wanted to build for-profit companies with specific social values faced a dilemma. They could create a business structured to focus primarily on profits, a corporation. Alternatively, they could create a business focusing on a social mission, a non-profit corporation. But the non-profit corporation could not operate for profit. So if they wanted to be profitable, they couldn’t as effectively capitalize on the socially responsible reputation that non-profits achieved, even if it was an important part of their business identity. However, SPCs can now bridge that gap. In today’s blog post we discuss how an SPC allows a company to more...

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Business Startup

Shareholder Inspection Rights for Washington Corporations

Becoming a shareholder in a Washington corporation comes with certain statutory rights, including the right to inspect the company’s records. These shareholder inspection rights may not be included in the company’s articles or bylaws, and many shareholders are not aware the shareholder inspection rights exist. But it can be very important to understand what documents you have a right to see as a shareholder. Below, we’ve highlighted the ins and outs of shareholder inspection rights in Washington and the procedural requirements for requesting records.

Who can request corporate records?

Under RCW 23B.16.020, shareholders of a corporation are entitled to inspect and copy a corporation’s records at the company’s office and during normal business hours if the shareholder gives that corporation at least...

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Business Startup

Getting Back to the Basics: Choosing the Best Entity For Your New Business (Part 2): LLCs and Corporations

In our first post in this series on choosing the best entity for your new business we explored sole proprietorships and partnerships. Today’s post will highlight two additional business entities: the limited liability company (LLC) and corporation.

Flexibility is Key for the LLC

An LLC is a legal entity in which one or more individuals (“members”) have limited liability for the business’ debts and obligations even if they participate in management of the company. Members of an LLC have great flexibility in structuring the operation and management of their venture through the LLC’s governing document, known as an operating agreement. If the LLC does not draft an operating agreement, its activities will be governed by state statute.

For tax purposes, an LLC is...

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