If you are forming a new corporation in Washington, you might find the below list helpful. The formation steps for forming a new Washington corporation are:
- File Articles of Incorporation with the Washington Secretary of State to create the corporation under state law. You will want to make sure that the Articles contain the following characteristics: (i) no cumulative voting; (ii) no statutory preemptive rights; (iii) less than unanimous shareholder consent is authorized; and (iv) the broadest release from liability and indemnification provisions possible.
- If the initial directors are not named in the Articles of Incorporation, the incorporator will need to execute a consent naming the initial directors.
- The initial directors will then need to have an “Organizational Meeting” or execute an “Organizational Consent in Lieu of a Meeting” in which they (i) appoint officers, (ii) adopt bylaws, (iii) authorize the initial share issuances, (iv) authorize the commencement of doing business, and (v) other matters.
- If the corporation is eligible and intends to elect to be taxed as an S corporation, do not forget to file the S corporation election timely and have spouses sign it as well if required. If any of the initial shareholders live in community property states, then spousal consents will typically be required even if the shares are held in the name of the shareholder spouse only. An S corporation election without required spousal signatures is not valid.
- Once you receive the Articles of Incorporation back from the Secretary of State, use the UBI number stamped on the front page to apply for a business license on the Washington State Department of Licensing web site.
- You will then need to apply for and obtain any necessary city business licenses.
- You will then need to obtain a taxpayer identification number from the IRS.
- The initial shareholders should then subscribe for their shares, execute stock subscription agreements and pay for their shares. The stock subscription agreements should contain appropriate vesting and buy back rights. The initial shareholders will need to file 83(b) elections if required.
- The initial service providers to the company should execute IP assignment agreements and agreements which assign IP arising out of ongoing services to be provided to the corporation.
- The corporation will need to open a bank account in its own name and deposit the checks written to it by the initial shareholders. At all times the corporation should have a separate financial life than the financial life of its owners.
- Do not forget to file the initial annual report that is returned with the file stamped Articles of Incorporation.
It is advisable to consult with counsel throughout this process.