PDFWAC 4-30-110

What are the allowable legal forms of organization and ownership requirements for a CPA firm?

(1) Permitted forms of organization. A CPA firm may be organized as:
(a) A proprietorship;
(b) A partnership;
(c) A professional corporation (PC) or professional service corporation (PS);
(d) A limited liability company (LLC);
(e) A limited liability partnership (LLP); or
(f) Any other form of legal entity authorized by Washington state statute for use by a CPA firm.
(2) What happens when a CPA firm alters its legal form? A mere change in the legal form of an existing firm constitutes a new firm for licensing purposes. Accordingly, the new entity must first obtain a CPA firm license from the board and then dissolve the former firm unless the owners desire to maintain more than one licensed firm. Affiliated entities using a restricted title or offering or performing restricted services are subject to board rules.
(3) What are the ownership requirements for a CPA firm?
(a) All owners of a licensed CPA firm are required to:
(i) Fully comply with the provisions of chapter 18.04 RCW; and
(ii) Be subject to discipline by the board for violations of chapter 18.04 RCW and this board's rules contained in Title 4 WAC;
(b) A simple majority of the ownership of the licensed firm in terms of financial interests and voting rights of all partners, owners, or shareholders must be:
(i) Licensees in this state or holders of a valid license to practice public accountancy issued by another state;
(ii) Entitled to practice public accounting in Washington state; and
(iii) Principally employed by the firm or actively engaged in its business.
(c) At least one general partner of a partnership, one shareholder of a corporation, and one member of a limited liability company must be a licensee.
(d) Each CPA proprietor, partner, shareholder or member who is either a resident or is entering the state and practicing public accountancy in this state must hold a valid Washington state license or practice privileges.
(e) A principal owner and any individual having authority over issuing reports must be a licensee under the act or holder of a valid license to practice public accountancy issued by another state and must be entitled to practice public accounting in this state.
(f) A nonresident CPA owner must be licensed to practice public accountancy in at least one state.
(g) A nonlicensee owner must:
(i) Be an individual;
(ii) Meet the good character requirements of RCW 18.04.105 (1)(a);
(iii) Comply with the act and board rules; and
(iv) Be an active individual participant in the licensed firm or affiliated entities as these terms are defined in WAC 4-30-010; and
(h) A resident nonlicensee firm owner must meet the requirements of WAC 4-30-116 and register with the board concurrent with submission of the firm license application, or submission of an amendment to the firm license status, to the board.
(4) What are the requirements for the firm's main office and a branch office? A firm's main office located in this state must be under the direct supervision of a resident licensee.
A branch office is an office of a licensed CPA firm which is physically separated from the main office. A branch office operates under the license of the main office.
[Statutory Authority: RCW 18.04.055. WSR 16-17-036, § 4-30-110, filed 8/9/16, effective 9/9/16. Statutory Authority: RCW 18.04.055(8), 18.04.195, 18.04.205. WSR 11-07-070, § 4-30-110, filed 3/22/11, effective 4/22/11; WSR 10-24-009, amended and recodified § 4-30-110, filed 11/18/10, effective 12/19/10; WSR 08-18-016, § 4-25-750, filed 8/25/08, effective 9/25/08; WSR 05-01-137, § 4-25-750, filed 12/16/04, effective 1/31/05; WSR 03-24-033, § 4-25-750, filed 11/25/03, effective 12/31/03; WSR 02-04-064, § 4-25-750, filed 1/31/02, effective 3/15/02; WSR 00-11-074, § 4-25-750, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055(8) and 18.04.205(3). WSR 99-18-117, § 4-25-750, filed 9/1/99, effective 1/1/00. Statutory Authority: RCW 18.04.055(3), 18.04.205(3) and 18.04.195. WSR 96-12-061, § 4-25-750, filed 5/31/96, effective 7/1/96. Statutory Authority: RCW 18.04.055. WSR 93-22-089, § 4-25-750, filed 11/2/93, effective 12/3/93.]