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Small businesses are opening their doors across the country every single day. And nowhere is that more evident than in Washington State. Home to megabrands like Amazon, Microsoft, and Starbucks, it’s also a burgeoning home for first-time entrepreneurs: Today, there are more than 645,000 small businesses, which make up a significant portion of the state’s economic growth and success.
Like most states, choosing your business structure in Washington will affect legal liability, taxation, and other aspects of your business.
Washington requires that all businesses apply for a business license before they can begin operating.
Washington does not have corporate or personal income taxes. Still, you must pay B&O taxes on your tax return.
Easily start your business and remain compliant with our all-in-one tools, guiding you well past the initial setup with the right support and documents.
While going from a nine-to-five job to calling your own shots might seem daunting, there’s good news: Today’s small business owners started precisely where you’re at, too. And thanks to some tried-and-true best practices, getting up and running starts with following a few key steps.
Whether you’re a seasoned entrepreneur or just starting, this guide dives into the eight essential things you need to know to set up a business in Washington — from developing your business idea and choosing a name to registering your business and securing the proper paperwork.
One key thing you should know about the state of Washington: It offers a diverse and thriving business landscape filled with limitless opportunities. That means the sky is the limit when finding the right business idea.
Still, this first step can feel daunting for many – choosing your business idea will ultimately determine your business’s short- and long-term success and competitive differentiation. You ’ll want to make sure your vision not only meets some need or demand in your community – but that it also has plenty of potential to be profitable and sustainable.
It’s also important to note that your business idea doesn’t have to be 100% original–almost every successful business has been built by offering existing products or services with a fresh, new twist. Instead, focus on a business idea that’s cost-effective, marketable, and suitable for your target audience in Washington.
If you’re starting with a completely blank slate for your new business, here are a few ideas that are a perfect fit for Washington’s market:
Tech Startups: Seattle, in particular, is known as a technology hub. Consider starting a tech company in software development, artificial intelligence, cloud computing, or cybersecurity.
Eco-Friendly Products and Services: Given the state's commitment to sustainability, there's a growing demand for eco-friendly products and services. Consider businesses focused on renewable energy, recycling, sustainable agriculture, or environmentally-friendly consumer goods.
Outdoor and Adventure Tourism: With its natural beauty and recreational opportunities, Washington State is an excellent place to start a business related to outdoor activities, such as guided hiking tours, kayak rentals, or camping gear sales.
Food and Hospitality: Seattle and other major cities in Washington offer diverse culinary scenes. Consider starting a food truck, restaurant, or cafe specializing in local or international cuisine.
Home Improvement and Remodeling: With a strong housing market, home improvement and remodeling businesses are in demand. Consider offering interior design, landscaping, or energy-efficient home upgrades.
Educational Services: Washington is home to several universities. Start an educational consulting, tutoring, or test preparation service.
Cannabis Business: Washington has legalized recreational cannabis, so there are tons of opportunities in the cannabis industry, including retail stores, cultivation facilities, and cannabis-related products and services.
A successful business starts with a business plan. Creating one is optional in Washington, but it’s a crucial step in getting things up and running. It will lay the current – and future – framework for your business.
This means it’ll provide the structure, vision, direction, and sense of purpose your business needs to hit the ground running – and to stay on course. Without a business plan, you may struggle to define and achieve your path to success.
Although writing a business plan may seem overwhelming in figuring out how to start a business in Washington, it’s relatively straightforward. Here are a few must-haves:
Executive Summary: This is a concise overview of the entire business plan, summarizing the business concept, its mission, key objectives, and a brief snapshot of financial projections. It's often the first section a reader will see, so it should be compelling and informative.
Market Analysis: Conduct thorough market research to understand your industry, target market, customer demographics, and market trends. Identify your competition and analyze their strengths and weaknesses.
Products or Services: Describe in detail what products or services your business offers, including their features, benefits, and any intellectual property or proprietary technology.
Marketing and Sales Strategy: Outline your strategies for marketing and selling your products or services. Include your pricing strategy, distribution channels, and promotional tactics.
Financial Projections: Include detailed economic forecasts, such as income statements, balance sheets, and cash flow statements. These projections should cover the first three to five years and include best-case, worst-case, and realistic scenarios.
Milestones and KPIs: Set specific milestones and key performance indicators (KPIs) that you'll use to measure your business's progress and success over time.
Risk Analysis: Identify potential risks and challenges your business may face and explain how you plan to mitigate these risks.
Once you feel confident in your business idea, it’s time for the fun part: naming your business. Get creative, inject your personality, and brainstorm ways to capture your unique vision. Choosing the right business name is also vital in creating a first impression with first-time customers – and it can ultimately help to set you apart from the competition when you enter the market.
You have a ton of freedom here, but there are a few best practices to remember. Before you start jotting down some potential names, here are a few things to consider:
Take a deeper look at your business: What products or services will you offer? Who is your target audience? And what core message do you want to convey? As you answer these questions, jot down any words that come to mind.
Get creative: Once you have some of those ideas written down, think about ways to elevate them–either by introducing unique spellings, rhyming, or alliteration.
Keep it simple: Make sure your business name is clear, easy to spell, pronounceable, and not too complex or lengthy. This ensures your name is memorable – which, in turn, can help boost your visibility over time.
Think about scalability: You want your business name to grow with you–not hold you back or introduce limitations. Consider whether the name will still be suitable if your business expands or diversifies its offerings in the future.
Check availability: Before you get too attached to a name, you’ll want to make sure another business has not taken it. Fortunately, this information is easy to find – you must search the Washington Business Licensing Service and the Secretary of State websites., You can also use this comprehensive Free Business Name Search tool. If you plan on launching your business online, you’ll also want to check if the domain name is available.
Make it official: Once you land on your unique name, reserve it by filling out a name reservation form. You can reserve a name for your Washington business by filing a Name Reservation form with the Secretary of State.
Now, it’s time to decide on your business’s legal structure. This is an essential step in the overall business formation process. Whether you choose an LLC or sole proprietorship, your business entity choice will affect everything from your personal liability if anything goes wrong, to your tax obligations, paperwork, and management structure.
If it sounds overwhelming, don’t worry. There are a few common business structures that first-time entrepreneurs typically consider. Here’s a breakdown of the most common business formation types:
As a sole proprietor, your business is owned and operated by one individual who is personally liable for all debts and obligations of the business. In Washington, you can start a sole proprietorship without legal paperwork. It's important to note that if you don't plan to use your own name as your business name, you will need to register a Doing Business As (DBA) name. You can easily (and quickly) register your DBA name here.
Unlike a sole proprietorship, an LLC signifies that your business is a separate entity from the owner, giving you liability protection. This helps to protect your personal assets in the event of a lawsuit. Your LLC is also a pass-through entity, and your profits and losses pass through to individual business members, who then report on them on personal tax returns.
Most small businesses prefer the LLC structure due to its easy maintenance and favorable tax treatment.
Your business is a legal entity completely separate from its owners. A corporation also provides limited liability protection to shareholders. Typically, corporations are subject to double taxation (unlike pass-through entities like LLCs). Still, Washington is in a small minority of states that don’t tax corporations twice.
It's important to note that businesses must separately file as "S corporations." An S corporation is a special tax status created by the Internal Revenue Service (IRS) that allows your company to be taxed as a pass-through entity, avoiding paying a corporate tax on business income.
If your business has a mission to support a cause or aid underserved communities in Washington, you’ll want to look into the nonprofit business type. These types of organizations are tax-exempt, and all profits are reinvested back into the organization.
Get ready for some paperwork–your next step is filing your business formation documents. This phase is crucial because it officially establishes your business as a legal entity and legal structure, formalizing its existence with the government.
Here's what you need to consider.
Before you get started, you’ll need a registered agent in Washington. Your Washington registered agent is your official point of contact between your business and the government. They oversee and handle all official documentation, communications, and legal paperwork. You can either choose an individual yourself or use a registered agent service.
Washington LLCs should file articles of organization (also known as a certificate of formation) with the Secretary of State. While not required by the state, it’s also important to consider drafting an LLC Operating Agreement. This document will outline your daily operations, making it an essential piece in your business formation puzzle.
For corporations, you’ll need to file articles of incorporation (also known as a certificate of incorporation). Similar to an LLC’s Operating Agreement, it’s recommended that you prepare bylaws to establish your corporation’s internal operating rules (but, again, it’s not required).
It’s important to note that filing your business formation documents is a critical part of starting a business in Washington. This paperwork ultimately helps you establish your business as a separate legal entity in the state of Washington, which helps to determine everything from how you’re taxed to what licenses you may need (and so much more).
But before you panic about this step, consider this: Third-party services like ours can help simplify this process by handling the filing on your behalf. That'll also ensure that your business formation documents are filed correctly and on time.
Starting a business in Washington means registering with several federal, state, and local agencies. This is another crucial step in the overall business formation process. These licenses and permits are essential to keeping your business state-compliant and operating.
The specific business licenses and permits required in Washington can vary depending on the nature of your business, its location, and many other factors. That’s why it’s essential to research and understand the requirements that apply to your specific situation. Overall, however, there are a few standard Washington business licenses you’ll likely need:
Washington requires that all businesses apply for a business license. For $90, you can submit your application via the Business Licensing Wizard tool to start the process. To streamline the process further, this tool will pinpoint your location in Washington and help you identify any other regional or state permits and licenses your business may need.
Once you apply for a business license, you’ll receive a Unified Business Identifier (UBI) number. After that, the Washington Department of Revenue will work with you to pull the information needed to collect and remit sales and business and occupation (B&O) taxes (more on this later).
In addition to the state business license, many cities and counties in Washington may require businesses to obtain a local business license or permit. Check with your city or county government to determine their specific requirements.
If you plan to run a business from home, you may need a home occupation permit from your local zoning department. Home-based businesses often have specific regulations to ensure they do not disrupt residential neighborhoods.
Certain professions and occupations, such as healthcare providers, contractors, attorneys, and real estate agents, may require specific professional licenses or certifications issued by state agencies or boards.
If your business sells tangible goods, you’ll probably need to obtain a Washington State Sales Tax Permit from the Washington State Department of Revenue. This permit allows you to collect and remit sales tax on taxable sales.
These are just some licenses and permits you’ll need to remember to operate in Washington. It’s essential to conduct thorough research to ensure you’re checking every box for this step. Companies like Swyft Filings can work with you to determine which permits and licenses you need.
After you register with the Washington State Department of Revenue, it’s time to start thinking about the annual taxes (at both the federal and state level) you’ll have to file with the Internal Revenue Service (IRS).
Washington State is known for its business-friendly tax environment, primarily because it does not have a state income tax on individuals or businesses. Still, there are certain taxes you must keep in mind – failing to pay any of the taxes listed below on time could result in a tax penalty. Here are a few you need to be aware of:
Washington does not have corporate or personal income taxes, but you’ll have to pay B&O taxes on your tax return. This rate can vary, mainly depending on your industry and gross income. It’s important to note that some cities throughout Washington may have separate B&O taxes that you’ll have to pay on top of the state requirements.
Washington imposes a sales tax on the retail sale of tangible goods and some services. The statewide sales tax rate is currently 6.5%. Still, local jurisdictions may add additional sales taxes, making the actual rate higher in some areas. Businesses are responsible for collecting and remitting sales tax to the Department of Revenue.
All businesses, including small businesses, must file federal income tax returns with the IRS annually. The type of federal tax return will depend on the business structure.
Setting up a solid financial system is one of the last significant steps for starting a business in Washington. It’s not just about managing your money; it’s about protecting your personal assets and simplifying your financial life.
To get started, you must get a federal Employer Identification Number (EIN) from the IRS. Think of it as a social security number but for your business. While it’s a must if you plan to hire employees, it’s also handy for opening a business bank account. Many banks will want to see this number before they let you set up an account in your business’s name.
Plus, if you’re dealing with other companies, they often require an EIN to handle payments. Getting an EIN is a straightforward process, and some third-party services like us can handle the paperwork.
Once you have your EIN, it’s time for the big move: opening a bank account specifically for your business and obtaining your business credit card. This account becomes the hub for all your business income and expenses. With everything running through this account, you’ll have an easier time tracking your money – what’s coming in, going out, and what’s left in the piggy bank.
It’s like having a clear window into your business’s financial health – making it easy to keep your bookkeeping accurate.
Whether in Seattle, Spokane, Tacoma, or beyond, Washington State is a thriving mecca for first-time entrepreneurs–thanks to its strong economy, diverse population, innovative spirit, and overall quality of life.
If you’re ready to start a business in Washington, Swyft Filings offers the services, support, and expertise you need to navigate your way to the grand opening seamlessly. You can start your business journey today.
Your Perfect Fit: Whether you're looking at a simple LLC or a dedicated nonprofit, we'll help you identify the best structure for your dream business.
Continued Support: Your entrepreneurial journey doesn’t stop at formation. Our key management services help ensure your business thrives.
Tailored Affordability: Get value-packed options suited to your business needs, starting at just $0 + state fees.
For this section, provide answers to the questions below. If you research turns up other potential questions, feel free to include them.
Washington State has a strong and diverse economy, with major industries including technology, aerospace, agriculture, and healthcare. These factors, coupled with the state’s business-friendly tax environment, make it a ripe growing ground for startups.
The flat fee to form an LLC in Washington State is $200 for the initial LLC paperwork. To incorporate in Washington you must pay a $180 filing fee. You’ll also have to apply for the Business License Application, which costs $90.
While a business plan isn't required in Washington, it's still a good idea to create one. Consider it your official roadmap to realizing your short- and long-term business goals.
The requirements to start a business in Washington can vary depending on the type of business you want to open, and in what city you plan to plant your roots. In general, however, you’ll need to apply for a Business License Application to get things running.
The above guide outlines everything you need to know to start in Washington. This includes:
Decide on your business idea
Draft a business plan
Choose a business name
Decide on your business structure
File business formation documents
Apply for permits and licenses
File and report business taxes
Open a business bank account
Lincoln Business Guides. “Washington Small Business Statistics (2022).” Accessed November 2, 2023.
Washington State Department of Revenue. “Business Lookup.” Accessed November 2, 2023.
Washington Secretary of State. “Corporations & Charities.” Accessed November 2, 2023.
Washington Secretary of State. “FAQ - Registered Agent.” Accessed November 2, 2023.
Washington State Department of Revenue. “Business tax structure in Washington State.” Accessed November 2, 2023.
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