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Can Washington State Define an LLC?
Posted by
Eric Meltzer
on December 17, 2009
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Like other people curious about the world, I enjoy Wikipedia. It’s an excellent reference point for esoterica, trifles, and whimsicalities. Certainly, its problems have been exhaustively documented, but its development has mirrored that of most eight-year olds: some growing pains, sure, but also an overarching and life-enriching cuteness.
And while Wikipedia can be an excellent place to begin a research project, no one believes it should end there.
That’s why I was more than a little surprised when I recently visited the Washington Secretary of State’s website regarding Limited Liability Companies, more commonly known as LLCs. Although LLCs have quickly become one of the most popular business entities in the state, the Washington Secretary of State’s Office leaves it to Wikipedia to explain what exactly they are.
This is not good information design. According to Wikipedia’s own entry on itself, “[c]ritics…accuse it of systemic bias and inconsistencies.” Its “reliability and accuracy are also claimed to be an issue.” In fact, Wikipedia’s general disclaimer screams that “WIKIPEDIA MAKES NO GUARANTEE OF VALIDITY”, as lovingly parodied by The Onion’s “Wikipedia Celebrates 750 Years of American Independence.”
Is this the best way to serve Washington entrepreneurs? Perhaps an excerpt from the Revised Code of Washington would be better. Although to be fair, Washington's own definition of the term "Limited Liability Company" is more than a little circular. RCW 25.15.005 states that "'Limited liability company' . . . means a limited liability company having one or more members that is organized and existing under this chapter." Not especially helpful. Still, can't the Secretary of State write its own definition that is closely aligned with Washington law? Or why not take Delaware’s approach and provide a useful and easy to understand chart?
We at Imua Legal Advisors believe that for many small businesses, business incorporation and filing are tasks that business owners can perform without paying huge fees to their attorneys. The Secretary of State's website is the logical first stop for many such business owners. The site is good at processing applications and taking your filing fees. But this ease, without context, can actually lead to a false sense of security for businesspeople who aren't complying with LLC rules. We would love to see Washington take a more proactive, business-friendly approach that actually encourages not only registration, but suggests a certain set of behaviors to put businesspeople on the path to success.
In the mean time, if you're thinking of filing an LLC or you already have one set up, be sure to download our free "Go Forward Guide to the Care and Feeding of your LLC." Just click the orange "Free Go Forward Guide" button on the right-hand column of this site. Or you can call us to schedule a free initial consultation: 877-599-9386.