How to Start a Business in Washington State

Learning how to start a business in Washington state is attractive for potential small business owners, since Washington offers a supportive environment for small businesses. But before you can open your doors, you’ll need to have all the right parts.

From refining your business idea and business plan, to obtaining all the necessary licenses and equipment, let’s break down the process and highlight why following the right steps is important.

TL;DR: How to start a business in Washington state

Moving fast? Here’s the quick guide to starting a business in Washington. 

1. Choose a business structure taking into account your liability and needs
2. Register your business with the Washington Secretary of State
3. Obtain necessary licenses from the State Department of Revenue and other bodies
4. Understand Washington taxes including the B&O tax
5. Set up a business bank account separate from your personal account
6. Hire employees while respecting Washington regulations
7. Market and launch your business for a grand opening

What are the different types of business structures in Washington?

Choosing the right business structure is one of the most critical decisions you’ll make when you think about how to start a small business in Washington state. Each structure has its own set of implications for liability, taxes, and day-to-day operations. Let’s explore your options.

Sole proprietorship

A sole proprietorship is the simplest business structure. You, as the owner, have complete control over the business. This structure does not require formal registration, making it easy to set up. However, you are personally liable for all business debts and obligations, which can be a significant risk.

Partnership

A partnership involves two or more people sharing ownership. There are two main types: general partnerships and limited partnerships. 

In a general partnership, all partners share equal responsibility and liability. In a limited partnership, one or more partners have limited liability and do not participate in day-to-day management. Partnerships are relatively easy to establish but require a solid agreement to outline roles and responsibilities.

Limited Liability Company (LLC)

An LLC combines the benefits of a corporation and a partnership. It offers limited liability protection to its owners, meaning your personal assets are protected from business debts. LLCs are flexible in management and have fewer compliance requirements than corporations. However, they may have higher setup costs and more paperwork compared to sole proprietorships and partnerships.

Corporation

Corporations are more complex and suitable for larger businesses. They offer the strongest protection against personal liability, as the business is a separate legal entity. Corporations can raise capital by issuing stock, making them attractive to investors. However, they require more extensive record-keeping, operational processes, and compliance with regulations. 

There are two main types: C corporations and S corporations. C corporations face double taxation on profits, while S corporations can pass income directly to shareholders to avoid double taxation.

Understanding the advantages and disadvantages of each option helps you make an informed decision. The LLC is often the most common structure for small businesses due to its balance of liability protection and operational flexibility. 

How to register your business in Washington

Conducting a business name search ensures your desired name is unique and available. Start by visiting the Washington Secretary of State’s website. Use their business name search tool to check if your preferred name is already in use. This step prevents potential legal issues and confusion with other businesses.

Registering a trade name or DBA (Doing Business As) allows you to operate under a name different from your legal business name. If you are a sole proprietor or partnership, you must file a Business License Application with the Washington Department of Revenue. For LLCs and corporations, file a trade name registration with the Secretary of State. This process is straightforward and can be completed online or by mail.

Trademark considerations protect your business name and brand on a national level. While registering a trade name or DBA offers state-level protection, a trademark provides broader security. To trademark your business name, file an application with the United States Patent and Trademark Office (USPTO). This step helps safeguard your brand from being used by others across the country.

Types of business licenses in Washington state

Starting a business in Washington state requires obtaining the right licenses and permits. These vary depending on the type of business and its location. State and local licensing requirements ensure that your business complies with regulations. 

State and local business licenses

If you’re wondering how to get a business license in Washington state, most businesses need a general business license from the Washington State Department of Revenue. This license allows you to legally operate within the state. Additionally, you may need a city or county business license, depending on where your business is located.

Common licenses

Certain businesses need special licenses. For example, if you plan to open a restaurant, you will need a food service permit from the Washington State Department of Health. Similarly, businesses selling alcohol must obtain a liquor license from the Washington State Liquor and Cannabis Board. Other examples include professional licenses for accountants, contractors, and healthcare providers.

To obtain the necessary licenses and permits, start by visiting the Washington State Department of Revenue’s Business Licensing Service website. Here, you can apply for a general business license and find information on additional licenses you may need. For local licenses, check with your city or county government. They often have online resources to guide you through the application process. 

Operating without proper licensing can lead to serious consequences. You may face fines, legal action, or even the closure of your business. Ensuring you have all required licenses not only keeps you compliant but also builds trust with customers and partners.

What are the tax requirements for Washington businesses?

Small business taxes can be a major source of anxiety for new business owners. Understanding the various tax obligations is essential to avoid penalties and ensure smooth operations. Alongside finance tips for new business owners, you should know the following tax information. 

Washington state business & occupation tax

Washington state does not have an income tax, but it does impose a Business & Occupation (B&O) tax on the gross receipts of almost all businesses operating in the state. This tax applies to the value of products, gross proceeds of sales, or gross income of the business. 

The B&O tax rate varies depending on the classification of your business activities, such as retailing, wholesaling, manufacturing, or service activities. It’s important to determine your business’s classification to apply the correct tax rate.

Sales tax

If your business sells tangible personal property or certain services, you must collect sales tax from your customers. Washington’s state sales tax rate is 6.5%, but local jurisdictions can add additional taxes, making the total rate higher. 

You need to register for a sales tax permit and regularly file sales tax returns to report and remit the collected taxes. Sales tax applies to both in-state and some out-of-state sales, depending on where the customer takes possession of the goods or services.

Other state taxes

In addition to the B&O tax and sales tax, some businesses may be subject to other state taxes. These can include the public utility tax for businesses providing utility services, the use tax for goods purchased out-of-state but used in Washington, and the excise tax for specific products like tobacco and alcohol. Each of these taxes has its own filing and payment requirements.

Federal tax obligations

Federal tax obligations include income tax, employment taxes, and excise taxes. All businesses must file an annual income tax return with the IRS. The type of return depends on your business structure, such as Form 1040 Schedule C for sole proprietorships or Form 1120 for corporations. 

If you have employees, you must withhold federal income tax, Social Security, and Medicare taxes from their wages and remit these to the IRS. Additionally, you may need to pay federal unemployment tax (FUTA).Understanding the tax landscape is crucial for compliance and financial planning. Registering for a tax ID number and knowing your filing and payment schedules will help you stay organized and avoid penalties. 

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Set up separate business finances

Mixing personal and business finances could lead to problems down the line. A business bank account keeps your personal assets safe, makes tax time way easier, and helps your business look legit to banks and vendors.

What you’ll need to open a business bank account:

• Employer Identification Number (EIN) from the IRS
• Business formation documents (like LLC Articles of Organization)
• Ownership agreements (for partnerships and corporations)

Comply with Washington labor laws when you hire employees

When you’re ready to hire your first employee, make sure you follow labor laws for doing business in Washington to stay on the right side of regulations.

Key hiring requirements in Washington:

• Report all new hires to the Washington State Department of Social and Health Services within 20 days of employment
• Follow minimum wage laws which is $16.66/hour in 2025, increasing annually.
• Purchase workers’ compensation insurance from the Washington State Department of Labor & Industries (L&I). Washington is a monopolistic state without private workers’ comp insurance.

Market and launch your business

Once you open a business in Washington, you need to make your mark on the map and grab the attention of customers. Whether you're launching a brick-and-mortar shop or an online store, marketing is key to getting those first sales rolling in and is a big step in learning how to start a business in Washington.

Essential marketing steps for new businesses in Washington:

• Create a business website: Use platforms like Wix, WordPress, or Shopify.
• Claim your Google Business profile: This helps with local search visibility.
• Use social media marketing: Platforms like Facebook, Instagram, LinkedIn are free to reach your audience.
• Network with local businesses: Use the Florida Chambers of Commerce as a great starting place.
• Try digital advertising: If you want to boost your efforts, use Google Ads or Facebook Ads to bring in customers fast.

What resources are available for Washington small businesses?

Starting a business can be challenging, but Washington offers various resources to help you succeed. These resources provide support, guidance, and tools to navigate the complexities of running a business.

• Small Business Administration (SBA) resources: With free business counseling, training programs, and funding options, the SBA can help you understand legal requirements and secure funding.
• SCORE mentorship programs: SCORE connects you with experienced business mentors who offer free, confidential advice. 
• Local chamber of commerce support: Joining your local chamber of commerce can open doors to networking opportunities, business referrals, and community involvement.

Washington state small business development centers: Washington state small business development centers (SBDCs) offer free, one-on-one business advising. These centers provide assistance with business planning, market research, financial analysis, and more. 

Start your business in Washington with the help of Homebase

Now you know the basics of starting a business in Washington state. With these steps, you can get the ball rolling—but once it’s rolling, you might run into unexpected challenges that drain your time and energy.

That’s why Homebase was made for small business owners like you, in order to make the hard work easier. Our all-in-one apphelps you manage scheduling, time tracking, payroll, hiring and onboarding, and team communication. Let’s make work easier—get started today.