Hey everyone. I set up an Oregon LLC last year because I live in Portland and that's where I registered. But almost all my consulting clients are in Washington, mostly Seattle area. Do I need to also register as a foreign LLC in WA? I've gotten conflicting info from Google. Some says if I never physically go there, I'm fine. But I do occasionally drive up for in-person meetings. Also not sure about taxes. Any clarity would be great.
Multi-state
My Oregon LLC is registered, but I work with clients in Washington
I'm not an expert but I think the rule is about 'doing business' in the state, not just having clie nts there. Driving up for occasional meetings might not count, but if you have an office or employees there, definitely. What does your CPA say?
Oh boy, here we go. This is the classic 'it depends' question. Good luck getting a straight answer that doesn't end in 'consult a lawyer.' But seriously, from what I've gathered: if you're just serving clients remotely from Oregon, you proobably don't need to foreign-register in WA. The physical presence test is key. Occasional meetings? Gray area. If you want to be safe, registering isn't that expensive.
I'm in a similar boat but reversed (WA LLC, OR clients). My accountant told me I didn't need to register in Oregon as long as I don't have a physical office or spend more than a certain number of days there. But B&O tax in WA is a whole other beast. Do you have to pay WA B&O tax on your consulting income from WA clients? That's the part that always trips people up
Yeah, the B&O tax is sneaky. Washington taxes gross receipts, not net. Even if you're an out-of-state business, if you have economif nexus (which can happen just from having WA customers), you might owe B&O. I think there's a small business credit though. But I'm just a guy on a forum, don't quote me.
lol @ 'consult a lawyer' being the only real answer. But honestly, for a small consulting gig, the cost of registering in WA might be less than the cost of a lawyer to figure out if you need to. Sometimes just paying the $200 and filing the annual report is the cheaper peace of mind.
That's true, but you also have to consider the annual report fees and the registered agent requirement in WA. It's not just a one-time cost. If you don't actually need it, it's a waste. Plus, if you register, you might trigger other tax obligations. I'd lean toward not registering unless you have a clear physical presence.
I've been an LLC in Oregon for 5 years and have clients in WA, ID, and CA. I've never registered in any of them. No issues so far. But I work from home, no employees, no offices. I do have a separate business license for the city of Portland, but that's it. Maybe I'm playing with fire, but nothing has happened.
PineconePete, do you pay B&O tax in WA? That's the thing that would worry me. The DOR can come after you for back taxes if they decide you had nexus. I'd at least look into the economic nexus thresholds. I think it's $100k in sales or something like that.
The threshold is $100k in gross receipts from WA sources. If you're under that, you might be exempt from B&O and sales tax collection. But the LLC registration is a different question. The DOR and the Secretary of State don't always talk to each other. You could be fine with SOS but owe taxes.
OP here. Thanks for the replies so far. I should have mentioned I'm well under $100k revenue, total, let alone from WA. Sounds like maybe I don't need to worry about B&O but I'm still unsure about the foreign registration. Some of you are saying don't bother, others say register to be safe. Ugh.
If you're under $100k, I wouldn't bother with WA registration. The risk of penalties for not registering is low, and the cost of registering is relal. But I'm not a lawyer. Maybe call the WA Secretary of State and ask? They might give you a straight answer.
Actually, the WA SOS website has a 'do I need to register' wizard. It's not perfect but it might help. It asks about physical presence, employees, etc. I'd check that. But remember, it's not legal advice.
I just remembered, I did have to register for a WA business license (UBI) because one client required it for their vendor setup. So there's that. It doesn't necessarily mean you have to foreign-register your LLC, but it's a separate thing. Maybe start there.
Yeah, a lot of larger companies require a UBI number for their vendors. It's a pain but easy to get online. But donn't confuse that with foreign LLC registration. Different animals. The UBI is just a tax registration.
Good point about the UBI. I'd say if you need it for a client, get it. But foreign LLC registration is probably oerkill for occasional meetings. I'd skip it unless you plan to open an office or hire someone in WA. Just my two cents.