How to Start a Business in Washington

A 2022 report by the US Small Business Administration confirmed that there are over 650,000 small businesses in Washington. Small businesses make up 99.5% of the business sector in Washington. That same year, 1.4 million people were employed by small businesses, accounting for 50.7 percent of the state’s population. In 2020, 11,341 identified companies exported goods worth $37.6 billion from Washington. 10,082 of those companies were small businesses. Their exports amounted to $12.3 billion.

Washington has one of the highest business survival rates in their first year. The state’s tax structure encourages business growth and development. It is a pro-business state. 

The Revised Code of Washington sets out the procedure for the formation, management, administration, and dissolution of all business structures in the state. Below is a detailed guide on how entrepreneurs can start their own business in Washington: 

Step 1: What Kind of Business Should I Start in Washington?

Washington is ranked one of the top states to do business in the US. The state’s business climate and strong economy create a supportive environment for small businesses and tech startups. Entrepreneurs should consider their skills, expertise, resources, and interests before choosing a business sector or industry. Businesses that typically thrive in Washington include:

Before starting a business in Washington, a potential business owner must consider their budget, resources, location, and sustainability. Hence, after deciding on a business idea, it is best to conduct market research to analyze all of these factors to better guarantee the likelihood of a successful business.

How to Do Market Research in Washington 

Market research is needed to gather and analyze information about the business’s target market. Market research gives insights into risks, competition, consumer behavior, demand, economic and industry trends and patterns. Gathering and analyzing data allows businesses to review gaps in the market and create strategies to meet demand. 

The following questions can help entrepreneurs identify their target market: 

Individuals can conduct market research using available data and existing sources. Alternatively, they can ask consumers directly or speak to residents in the state. Entrepreneurs may conduct direct research via:

Step 2: How to Write a Business Plan

A business plan is a formal document that highlights the business strategy, objectives, goals and vision, financial projection, and market analysis. A business plan is an outline that founders present to potential investors, stakeholders, and partners to secure funding and build partnerships and business confidence. It is a roadmap for perspective into the business structure, marketing, market analysis, scalability, financial projections, risks, and administration. 

Intending Washington entrepreneurs must draft a business plan tailored to their jurisdiction. It helps businesses modify their products and services to meet local demand. It also allows founders to ensure their enterprise complies with state and local regulations, including licensing and permits. 

Creating a business plan is an essential step in business formation for startups, small and medium-scale businesses, and large corporations. Companies may opt for the long traditional business plan or a shorter version, the lean startup business plan. The essential elements of a business plan include an executive summary, company description, market analysis and strategy, product or service report, market and sales plan, financial projections, competitive analysis, organization and management, and operating plan. 

Step 3: Do I Need a Business License in Washington?

Yes. Most businesses in Washington require a state business license and, in some cases, federal and local licenses and permits. Multiple institutions are responsible for the certification and issuance of licenses in the state. Federal and state agencies or county offices also issue licenses and permits.

Companies that fall within any of the following categories must obtain a state business license to operate in Washington:

While it is easy to determine if a business needs a standard state license, it is not the case for other federal, city, and council licenses and permits. Founders should consult the Washington Business Tax Guide or contact the Department of Revenue(DOR) to determine if their products or services are subject to taxes. The DOR also has extensive links with information on licensing requirements for cities and counties in Washington.

Before applying for a business license, the company must file with the Washington Secretary of State. 

This rule applies to corporations, partnerships, limited liability companies, and limited partnerships. Individuals can file a business license application online or by mail. The online application is certified and issued by the WA Department of Revenue. Online applications take ten business days to process. 

To complete a business license application online, applicants will need the following:

Alternatively, founders can mail the complete Business License Application, additional forms, and filing fee to Washington Business License Service. Application approval may take up to 2-3 weeks. 

State of Washington 

Business Licensing Service

PO Box 9034

Olympia, WA 98507-9034

The Business License Application can be used to apply for most state and city licenses and endorsements in Washington. However, it does not cover all licensing applications. Fortunately, Washington has an online Business Licensing Wizard to provide business owners with information and helpful tips about additional licensing requirements.

How Much Does a Business License Cost in Washington?

The state standard Washington business license costs $90, plus a $ 50 processing fee. Companies must also pay a $10 annual renewal fee plus a $5 processing fee for renewals. City and council endorsements, registrations, and permits have additional fees. The cost of a license ultimately depends on the industry the business operates in, the company’s location, and the type of business license required. 

Washington State Department of Licensing does not offer general license waivers. The only waiver available is the late renewal penalty waiver. License renewal fees paid after expiration are subject to late penalty fees. Penalty fees can be waived and refunded to license holders if their waiver application is approved. The Washington Department of Licensing provides no information on license fee waivers outside this. 

How to Get a Reseller Permit in Washington

The Washington DOR issues a reseller permit to manufacturers, wholesalers, retailers, and resellers. It is designed to allow retailers and wholesalers to waive sales tax on items purchased for resale. Likewise, it allows manufacturers to buy production materials without paying sales tax. Individuals with the appropriate business licenses, local endorsements, and a contractor’s license(if applicable) can apply for the reseller permit.

Individuals can apply for a reseller permit online at the Department of Revenue Reseller Permit page. Once the page loads, select ‘Apply for or renew reseller permit’ and follow the guide on the screen to obtain the reseller permit. To complete the application, please provide the following information:

Applicants can also get a reseller permit by paper application/mail. They can contact the Washington Department of Revenue for inquiries. All applications for reseller permits should be submitted via mail or fax to:

Department of Revenue

Attn: TAA Reseller Permit Team

PO Box 47476

Olympia, WA 98504-7476

Fax: (360) 705-6733

Phone:

Taxpayer Services: 1-800-647-7706

Taxpayer Account Administration: (360) 902-7137

Email: reseller@dor.wa.gov

Applying for a permit is free, and so is renewal. Generally, reseller permits last for four years. A permit will be valid for only two years where:

Step 4: How Much Does it Cost to Start a Business in Washington

According to the U.S. Small Business Administration, it costs around $ 3,000 to start a small-scale business or sole proprietorship, while most online businesses and other franchises may cost between $2,000 and $5,000. 

Per state law, to be legally recognized and authorized to operate in Washington, businesses must file with the Washington Secretary of State Office. Also, they are to pay the following fees:

How to Get Business Funding in Washington

The Washington Department of Commerce has several loan initiatives for small and developing businesses. Founders and entrepreneurs in Washington can also get funding for their companies through:

How to Self-Fund a Business in Washington

As a first-time business owner who is new to the ropes, self-funding is a reliable approach to securing startup capital. Self-funding means starting a business with personal funds. This method is better suited for small businesses because getting investors at this stage is more challenging. A business owner’s potential sources of income for self-funding include: 

How to Find Investors in Washington

Having someone invest in a company guarantees business connections, resources, expertise, and increased finances without the pressure to repay. Investors improve the business’s reputation and standing. It gives stakeholders (employees, customers, competitors, shareholders) confidence in the company and its prospects. Getting an investor on board can also increase the company’s market value. Anyone looking to secure an investor for their business should consider the following:

How to Get a Loan to Start a Business in Washington

There are several ways a small business or startup can source for business loans to start up their venture. Entrepreneurs may need a loan to hire employees, get an office space, develop a service, or improve products. 

Loan from Family and Friends

Entrepreneurs can reach out to relatives and friends for funding and financial support. In exchange, offer them partnerships, stocks, shares, or a percentage of revenue. Usually, loans from family and friends do not have fixed interest rates. They may also offer better repayment terms than traditional banks and lenders. 

US Small Business Administration (SBA)

The US Small Business Administration (SBA) does not offer loans directly but through SBA programs. These programs connect entrepreneurs with lenders who provide loans to help start, build, and grow their businesses. There are different SBA loan programs a business owner can apply to. The most popular program is the SBA 7(a) Loan. It funds short- and long-term working capital, refinances business debts, and general purchases. The SBA 7(a) loan is up to $2 million. SBA loans, in general, range from $500 to $5 million. The eligibility requirements depend on the lender, but a business must be:

To find a loan program better suited for a business, individuals should use the Lender Match feature to find a lender in their area.  

Bank Loans

Find out what banks are Washington’s biggest small business lenders. There are documents your small business must present to qualify for a bank loan. Although these requirements may vary from one bank to the other, the most common documents are:

Bank loans are not guaranteed; most lenders have strict regulatory compliance that applicants must meet to get and maintain a loan from the institution. These rules and regulations are set to ensure that the loan process is transparent, the terms are fair, and the recipient adheres to financial laws and standards.

Business Credit Cards

A business credit card is a great way to increase business financing power. It provides founders with a revolving line of credit with a defined credit limit using small business credit cards to make purchases and cash withdrawals. These credit cards are accessible to all business structures. They can act as a source of short-term financing or loans. Business credit cards are best for smaller expenses and cash flow management. Compared to traditional loans, they are flexible and easily accessible. Users only lay interest on the amount they borrow. However, cardholders must be careful not to acquire high-interest rates and accumulate credit card debts. 

How to Find Washington Business Grants

Business owners can find state grants and loan information on the Washington State Department of Commerce website. Small businesses and nonprofits should also be on the lookout for the following:

Can I Start a Business with No Money in Washington?

No, starting a business in Washington costs money. It costs $180 and an additional $20 filing fee to incorporate a company in Washington. Getting a business license can cost anywhere between $25-$500, depending on the kind of license and permits required. Furthermore, business owners must determine how they intend to fund their company because it will influence the structure and size of the company. 

However, not all enterprises are cost-intensive. There is no filing required to maintain a sole proprietorship. Individuals can simply start an online business, which does not require licensing from the comfort of their homes. 

Step 5: Choosing a Business Structure in Washington

Businesses in Washington operate under various models. Business owners should consult an attorney, financial advisor, or any other consultants to help them determine the best structure for their entity. The most common business structures that exist in Washington include:

There are factors a founder must consider before choosing any of the above ownership structures-

How to Start a Sole Proprietorship in Washington

A sole proprietorship is one where a single individual or a couple owns and manages the business. There are no members, partners, or shareholders in this business style. The owner bears the risk of loss, debts, and bankruptcy. This type of business is easy to set up and operate. There are fewer formalities, legal controls, and tax requirements. 

The Washington Secretary of State does not register sole proprietorships. Simply choose a unique business name, apply for permits and licenses, get an EIN if you intend to hire employees, and submit reports for taxation. Consult the Washington State Department of Revenue (DOR) for tax rates, licenses, and permit questions. Also, ensure the business meets all tax and compliance requirements to maintain good standing with the state. 

How to Start a Corporation in Washington

A corporation is authorized by law to act as a single entity. Like an LLC, a corporation has a separate legal entity from its owners. The owners of a corporation are also called shareholders. Corporations in Washington may be formed for profit or nonprofit purposes. Individuals who want to start a Corporation in Washington should:

How to Start an LLC in Washington

A limited liability company is a business structure that protects its owner’s personal assets from debts and liabilities. It exists as a separate legal entity from the company’s owners. LLCs are formed by one or more individuals, known as members, through a Certificate of Formation filed with the Washington Secretary of State.

An LLC is a hybrid business entity that combines elements of a corporation and a partnership. This feature allows businesses to opt to be taxed as pass-through entities. A pass-through entity is one where the company’s income is regarded as the members’ income. For this reason, the business is not taxed because the income, losses, credits, and deductions “pass-through” to the members’ personal tax income, and they are taxed individually. 

Here are the steps to start an LLC in Washington 

How to Start a Business Partnership in Washington

In Washington, a business partnership is a structure where two or more individuals or companies formally agree to trade or do business together. All partners in this structure contribute capital, resources, labor, or skill. They also share the profits and losses of the enterprise. There are three types of partnerships in Washington, namely, General Partnerships (GP), Limited Partnerships (LP), and Limited Liability Partnerships (LLP). 

How to Form a Limited Partnership in Washington 

A Limited Partnership (LP) has one or more general partners who lead and manage the company and other limited partners who finance the business but do not actively participate in the management and operations of the business. Limited partners are often silent. They are investors who do not shoulder any risk or liability except the money they invest. The difference between this and a limited liability partnership(LLP) is that the latter protects general partners from liability. It also excludes partners from the personal negligence of another partner. 

Limited partnerships can opt to be registered as LLPs by the Certificate of Limited Liability Partnerships during registration. Starting an LP is pretty straightforward – Choose an LP name (the law allows LPs to be named after their partners), designate a registered agent, file the Certificate of Limited Partnership, register for state and local taxes, and get a business license. 

How to Form a General Partnership in Washington 

Unlike limited partnerships, the Washington Secretary of State does not register general partnerships. However, where a partnership intends to operate under a name different from a partner’s name, such a company has to file a “Doing Business As” (DBA) name in the county where the business is located. A general partnership is where two or more individuals agree to operate and manage a business. All partners have the power to make contracts and take loans on behalf of the company. Also, partners are individually liable for the actions and negligence of other partners. To start a partnership in Washington, choose a partnership name, register the DBA name, obtain business licenses and permits, apply for an EIN online, register for personal income tax, and renew licenses and permits when due.

How to Start a Nonprofit in Washington

A nonprofit is a type of corporation that is established to accomplish a public or social benefit. The goal of a nonprofit is to raise funds for charitable causes and public good rather than generating revenue or profit for the organizers. Nonprofits are founded by a community of people with a common purpose. There are no shareholders. To start a nonprofit in Washington:

Step 6: Choosing a Business Location in Washington 

Choosing the right location is crucial to business success. Consider factors such as foot traffic, accessibility to customers and suppliers, proximity to your market, local competition, market saturation, security, skilled workforce availability, transportation system, and cost of operations. Additionally, find out the zoning regulations and permits for businesses in that location. 

What Kind of Business Can I Run From Home in Washington?

There is no statewide regulation on running a business from a regulation complex. However, there are different city regulations for home businesses. For example, the Seattle Municipal Code permits residents to conduct business from their homes as long as it doesn’t affect other neighbors. The code doesn’t allow illegal dealings, the sale of hard drugs, and bed and breakfasts in residential homes. Other cities and counties like Kennewick and Clark County have rules to encourage entrepreneurs to establish their businesses at home while protecting neighborhoods from possible interference or nuisance. 

Even though a business is home-based, it must meet licensing requirements. Here are some home-based businesses for entrepreneurs in Washington:

How Do I Start A Small Business From Home in Washington

The process of starting a small business from home is the same as setting any regular business-

Starting a Business Online in Washington

The standard Washington Secretary of State filing requirements apply to online businesses. If the business structure presents as a sole proprietorship, partnership, LLC, or for-profit organization, it must be registered accordingly. Online businesses in Washington are required to obtain state business licenses if they:

In addition, entrepreneurs need to determine what city or county licenses and permits apply to their online business. Due to federal restrictions, online businesses are prohibited from selling firearms, ammunition, prescription drugs, chemicals, poisonous substances, and counterfeit goods. 

The legal requirements for starting a business are dependent on the business model. Different statutes guide the formation and regulation of business in Washington. For example, there is the Washington Business Corporations Act (RCW Chapter 23B), Washington Limited Liability Company Act (RCW Chapter 25.15), and the Washington Revised Uniform Limited Partnership Act (RCW 25.05). These acts provide the legal requirements for forming, administrating, and dissolving corporations, LLCs, and partnerships. There are no specific age requirements to start a business in Washington. However, a minor may need parental consent to obtain some licenses, open a bank account, etc. In cases of LLCs and corporations, the designated registered agent must be above 18. 

How to Get an EIN in Washington 

An Employer Identification Number (EIN) is a unique number issued to a business by the Inland Revenue Service (IRS). Just as the name says, it is an identification number. State agencies use it to identify your business. The IRS issues the EIN, not the Washington Secretary of State. Washington residents can apply for an EIN online on the IRA website if they have a Social Security Number or Taxpayer Identification Number. The application is open Monday to Friday, 7:00 am to 10 pm EST. Resident applicants may also apply via mail or fax using Form SS-4. 

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Non-US citizens or residents and those who do not have a physical business address are not eligible for online applications. They can only apply via fax or mail. Applicants in this category should mail or fax the SS-4 form to:

Internal Revenue Service

Attn: EIN International Operation

Cincinnati, OH 45999

Fax: (855) 215-1627 (within the US.)

Fax: (304) 707-9471 (outside the US.) 

How to Get a Washington Registered Agent 

A registered agent is an individual or company that receives the service of summons, lawsuits, compliance and tax information, and government correspondence on behalf of an LLC or corporation. The primary function of a registered agent is to receive and forward documents to the LLC or corporation, remind the company of deadlines, and help them meet compliance regulations. Before a business can register with the Washington Secretary of State, they must appoint a registered agent. The registered agent must be above 18 years old and have a physical street address in the state. The registered address must be available to collect and sign hand-delivered documents during business hours. A registered agent service may cost between $50 – $300 annually. Business owners can also delegate the role to a family or staff member. However, an LLC or Corporation cannot be its own registered agent. 

Patents, Trademarks, and Copyrights in Washington 

Patents, trademarks, and copyright are all intellectual property laws. The difference is that patents and trademarks protect industrial intellectual property while copyright protects creative works.

A patent is a legal right that confers on inventors the right to exclude others from commercially exploiting the product or invention. Patents are only granted to new inventions resulting from inventive activity and are capable of industrial application and innovations that significantly improve older patented work. Patents last for 20 years from the filing date. When the patent lapses, it goes into the public domain. In Washington, patents are issued by the United States Patents and Trademarks Office. 

A trademark is a mark employed during trade or business to identify goods from a particular provider and distinguish them from those of competitors. A trademark is any word, phrase, symbol, signature, brand, or combination that can distinguish a company’s goods or services. Chapter 19.77 of the Revised Code of Washington sets out the trademark registration law for the state. Trademarks in Washington can be registered with the Secretary of State and the US Patents and Trademarks Office.

Copyright is the right an author has over his work. Copyright automatically exists in creative works upon creation. Works eligible for copyright protection in Washington include literary, dramatic, musical, audiovisual, and artistic works such as poetry, novels, movies, songs, computer software, sculptures, and architecture. Copyright registration in the US is voluntary. However, Washington creators can register their works with the US Copyright Office for extra protection. 

Washington Business Tax 

The Washington Department of Revenue is the state’s official tax agency. Washington is one of the few states in the US that does not tax personal income. Washington tax system is called business and occupation (B&O) tax. The B&O tax is a gross receipts tax. It is calculated on the price of products, total revenue of sales, or total business income. The business tax rate in Washington varies according to the type of business activity. The DOR has a tax classification list for common business activities in the state. By this list, one business can be subject to multiple taxes. Other forms of business taxes in Washington are retail sales tax, use tax, and personal property tax. For further inquiries about the tax classification, contact:

Washington Department of Revenue

Telephone Information Center

Mon through Fri, 8 a.m. – 5 p.m. (PT)

360-705-6741 Business licensing

360-705-6705 Tax assistance

360-705-6706 Español (impuestos y licencias)

360-704-5900 Remote sales and consumer use tax

360-534-1324 Forest tax

Unclaimed Property

360-534-1502 Claims and holder reporting

Working Families Tax Credit

360-763-7300 Eligibility, applications & assistance

Are Business Records Public in Washington?

Yes. Business records are subject to Chapter 42.56, Washington Public Records Act, which grants the public access to government records. 

In Washington, business records are considered public records and include certificates of formation, business plans, trade name registrations, annual reports, and other records maintained by the Department of Revenue and the Secretary of State.  

Researchers can access public business records through the DOR public records registry. However, the same Public Records Act exempts the following documents from public disclosure: