Washington Corporation Formation: A Founder's Guide
A Washington for-profit corporation is governed by Title 23B RCW, the Washington Business Corporation Act. This guide walks through when a corporation is the right entity, what goes into the articles of incorporation, bylaws and initial board consent, the mechanics of founder share issuance, the federal C-corp versus S-corp election, and the securities issues that get founders into trouble. It is an educational resource, not Washington legal advice.
Quick answer
If the business is going to raise outside capital from professional investors, plans to offer broad equity compensation to employees, or is targeting an acquisition or IPO exit, a corporation usually wins over an LLC. Most Washington startups that take VC money form as Delaware C-corps for investor familiarity, but a Washington C-corp is a legitimate choice for many founders who plan to stay local and want a simpler dual-state footprint.
Corporation vs LLC tradeoff
Articles of incorporation under Title 23B RCW
The articles of incorporation are the public charter document filed with the Washington Secretary of State under Title 23B RCW. At a minimum, the articles must include:
- The corporate name (must contain a permitted designator such as Corporation, Incorporated, Company, Limited, or an abbreviation).
- The number of shares the corporation is authorized to issue and, if there is more than one class, the designation and the rights of each class.
- The street address of the corporation's registered office and the name of its registered agent.
- The name and address of each incorporator.
Optional provisions worth considering at formation include indemnification of directors and officers, limitation of director liability to the extent permitted under Title 23B RCW, and supermajority requirements for specified actions. The official chapter list and statutory text is at app.leg.wa.gov/rcw/default.aspx?Cite=23B.
Bylaws
Bylaws are the corporation's operating manual: how directors and officers are elected, how meetings are called and held, how voting works, how vacancies are filled, and how the bylaws themselves are amended. Bylaws are not filed publicly and can be amended by the board or shareholders as the bylaws and Title 23B RCW provide.
Boilerplate bylaws downloaded from the internet are usually fine for a single-founder corporation. They become risky the moment there are multiple founders with different rights, multiple share classes, or any kind of investor protection (board seat rights, protective provisions, anti-dilution).
Initial board consent and share issuance
After the articles are filed, the incorporators or initial directors must take a set of organizational actions, typically by written consent:
- Adopt the bylaws.
- Elect officers (President, Secretary, Treasurer, and any others provided in the bylaws).
- Approve the issuance of shares to founders, including the consideration paid for those shares.
- Authorize the opening of bank accounts.
- Approve the corporate seal and form of share certificates (if any).
- Adopt the fiscal year.
- Authorize tax elections (federal S-corp election if applicable; Washington tax registrations).
Founder shares are issued for consideration. That consideration can be cash, services already performed, or property transferred (including IP). Issuing shares for future services is more limited and depends on the structure (a restricted stock purchase with vesting is the typical workaround). Document the consideration in the board consent and the stock purchase agreement.
Founder vesting
For any corporation with two or more founders, I recommend founder vesting on every share. A typical structure is a four-year vest with a one-year cliff and monthly vesting thereafter, implemented through restricted stock purchase agreements with a repurchase right in favor of the corporation if a founder leaves before vesting completes.
If founder shares are subject to a substantial risk of forfeiture (which vesting creates), the founder will typically file an Internal Revenue Code Section 83(b) election within 30 days of issuance to be taxed on the share value at issuance rather than at each vesting event. This is a hard 30-day federal deadline. Missing it is permanent.
Securities compliance, issue-spotting only
C-corp vs S-corp considerations
The state-law entity is a corporation. C-corp versus S-corp is a federal tax election under the Internal Revenue Code, not a Washington state law concept. A few quick framings:
- C-corp default. Corporate-level taxation, then dividend taxation when distributed. Required for almost all venture-backed startups (most institutional investors cannot hold S-corp stock).
- S-corp election. Pass-through taxation, but with strict eligibility rules: at most 100 shareholders, only U.S. individuals (no entities, no non-resident aliens, with narrow exceptions), one class of stock. Often a good fit for small, closely held, profit-distributing corporations.
- QSBS potential. Section 1202 qualified small business stock can provide significant federal capital gains exclusion on C-corp stock held five years or more. Real planning consideration for founders.
The election is federal. I am a California attorney; federal tax issue-spotting is something I can do anywhere, but the actual tax planning decision should be made together with a tax advisor.
Annual reports
A Washington corporation files an initial annual report and then an annual report each year. As with LLCs, the Secretary of State's rule is that the annual report is "due by the last day of the month in which the business was originally formed or registered." See the Secretary of State's annual reports compliance page. The corporation also receives a UBI on formation, which it uses across state agencies. Like an LLC, the corporation will also need a Washington Department of Revenue business license (about ten business days for the base license; allow another two to three weeks for city-specific endorsements).
Washington legal leverage
Title 23B RCW gives Washington founders most of the same corporate flexibility Delaware founders use, including indemnification, director-liability limitation, and supermajority customization. The legal leverage point is choosing those optional provisions at formation rather than retrofitting them after a dispute or a financing. Retrofitting is allowed; it is also significantly more expensive than getting it right on the front end.
When attorney drafting matters
A single-founder Washington corporation with no outside capital and a generic business purpose is usually fine on the Secretary of State's web filing plus a clean form set of bylaws, board consent, and stock purchase agreement.
I worry about corporations where any of these are true:
- Two or more founders, or any meaningful equity going to early employees.
- Founder vesting on existing shares (the 83(b) clock is unforgiving).
- IP that was developed before incorporation and needs to be assigned in.
- Any planned outside investment, even a friends-and-family round.
- Multiple share classes, preferred rights, or convertible securities.
- An S-corp election, which has tight federal eligibility and timing rules.
Practical formation checklist
- Confirm the corporate name is available on the Secretary of State's business search.
- Designate a Washington registered agent with a physical Washington street address.
- File the articles of incorporation with the Secretary of State; capture the UBI.
- Hold the initial board consent: bylaws, officers, share issuance, bank account authorization, tax elections.
- Sign the founder stock purchase agreements (with vesting and repurchase rights if there are multiple founders).
- File any 83(b) elections within 30 days of stock issuance.
- Apply for the federal EIN.
- Apply for the Washington state business license and any city endorsements.
- Open the operating bank account in the corporation's name.
- Adopt founder IP assignment agreements and employee proprietary information and inventions agreements.
- Calendar the annual report due date (last day of the formation month) and the 83(b) deadline.
Related resources
For the LLC side of the entity choice, see my Washington LLC Formation Guide. For the operating agreement side of an LLC, see the Washington Operating Agreement Guide. For the California comparison, see California Incorporation and California corporate articles. A side-by-side California vs Washington comparison is coming on the Washington Business Law hub.
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