Legal restrictions on LLC names for worker cooperatives in WA state
<p>Myself and several friends are planning on starting a for profit worker-owned cooperative business that will provide landscaping services in Washington state.</p>
<p>Washington is one of a few states in the US that have created business structures specifically for worker cooperatives (see <a href="http://app.leg.wa.gov/rcw/default.aspx?cite=23.86" rel="nofollow noreferrer">RCW 23.86</a>), as opposed to having co-ops form as partnerships, LLCs, or corporations as in most states. However, we would like to start our co-op as an LLC to simplify our taxes and bookkeeping, reduce our startup fees, and to have more flexibility as far as our management structure.</p>
<p>Unfortunately, WA cooperative law prohibits people from using the word &quot;cooperative&quot; unless they form as a cooperative association under RCW 23.86. The regulations for naming LLCs (in <a href="http://app.leg.wa.gov/RCW/default.aspx?cite=23.95.305" rel="nofollow noreferrer">RCW 23.95.305</a>) state:</p>
<blockquote>
<p>(5)(a) The name of a limited liability company:</p>
<p>(i) Must contain the words &quot;limited liability company,&quot; the words &quot;limited liability&quot; and abbreviation &quot;Co.,&quot; or the abbreviation &quot;L.L.C.&quot; or &quot;LLC&quot;; and</p>
<p>(ii) May not contain any of the following words or phrases: &quot;Cooperative,&quot; &quot;partnership,&quot; &quot;corporation,&quot; &quot;incorporated,&quot; or the abbreviations &quot;Corp.,&quot; &quot;Ltd.,&quot; or &quot;Inc.,&quot; or &quot;LP,&quot; &quot;L.P.,&quot; &quot;LLP,&quot; &quot;L.L.P.,&quot; &quot;LLLP,&quot; &quot;L.L.L.P,&quot; or any words or phrases prohibited by any statute of this state.</p>
</blockquote>
<p>The word &quot;cooperative&quot; is specifically prohibited for LLC names. So obviously if we form as an LLC, then we cannot use the name &quot;XXXX Landscaping Cooperative, LLC&quot;. But I was wondering about the legality of calling ourselves &quot;XXXX Landscaping <strong>Co-op</strong>, LLC&quot;, since the word &quot;co-op&quot; is not specified in the list of prohibited words or abbreviations?</p>
<p>Obviously, this would be a sort of &quot;loophole&quot; since the law is designed to force all cooperatives into the structure dictated by the state in RCW 23.86, and forbid other businesses from calling themselves cooperatives. But I was wondering if legally, since the word &quot;co-op&quot; is not explicitly prohibited, are we entitled to use that name?</p>
<p>If we do have a legal basis for it, how would we approach this matter with the WA Secretary of State's office if they are resistant to the idea?</p>
<p>Thanks for your advice!</p>

<p>The law on the web page is not current: as of the beginning of the year, <a href="http://lawfilesext.leg.wa.gov/biennium/2015-16/Pdf/Bills/Session%20Laws/Senate/5387.SL.pdf" rel="nofollow">RCW 23.86.030(1) reads</a> (you'll find this under Sec. 9103) "The name of any association subject to this chapter must comply with part I, Article 3 of this act" and is otherwise unchanged. In Article 3, sec. 1301 governs names, giving the sec'y some discretion to deem a name to not be distinguishable from another, saying in (3) "A name may not be considered distinguishable on the records of the secretary of state from the name of another entity by virtue of...variation in  the  words,  phrases,  or  abbreviations indicating  the  type  of  entity,  such  as  "corporation,"  "corp.," "incorporated,"    "Inc.,". It does not list "co-op", but there is no legal requirement that the list be exhaustive. This discretion is, however, related to distinguishability. However, (4) then says</p>

<blockquote>
  <p>An entity name may not contain language stating or implying that the
  entity is organized for a purpose other than those permitted by the
  entity's public organic record.</p>
</blockquote>

<p>and I think that means "no". Note that LLCs, LPs, LLPs, business corporations, nonprofit corporations and cooperative associations all have name requirements of the type "must contain" and "may not contain" (a cooperative association, oddly, has no "must contain" requirements). I would say that we have to conclude that "legislative intent" was to more closely align names and legal status, and the new "purpose-implication" language isn't brilliantly clear, but that is what the intent of the law is. This is one of those issues that could easily work its way to the Supreme Court, if someone wanted to make a state case of it.</p>

business name washington