How To Start a Business in Washington: 8 Easy Steps

How to start a business in Washington

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Washington is an enticing state for new businesses. If you have a big idea, you can pitch to different investors for funding—it is among the top five states in the nation for venture capital investments. It is also home to some of the most innovative technology companies in the world.

The Evergreen State is equally attractive to small businesses, which make up 99.5% of companies in the state. Here is our eight-step guide to starting a business in Washington.

1. Choose a business idea

You must solidify your business idea before going any further with starting a business in Washington. Creating a business that stands the test of time requires you to be a strategic thinker, and you need to be able to answers these two key questions:

  • Who is your customer? Are your target customers consumers or other businesses? Is your product or service something that a customer would buy just once or are there ways you can generate repeat sales? Think through these questions and conduct market research to learn more about industry trends.
  • What will your profitability be? You have to make a healthy profit for your business to survive. Identify how much money you would need to make from selling your goods or services to break even. This will give you insight into what your initial investment, sales strategy, and financial goals will look like.

2. Name your business

Confident in your idea? Next, you need a business name. There’s a balance to strike between picking a name that’s suitable, creative, and flexible, and one that fits legal requirements. Considerations include:

  • Is it creative? Your name should make sense for your business while also putting a spin on what’s expected. That way, customers will remember it against your competition.
  • Is the domain available? Check that your top picks for a business name are available as website domains. If they are open, buy one or more that are the best fit.
  • Is the name already registered in the state? Your business name can’t be used by any other business in the state of Washington. Check Washington’s Corporations and Charities Filing System via a corporation search to see if your business name is already in use.
  • Does it include required suffixes? If you want to register a formal business structure like an LLC or a corporation, your business name must contain words or abbreviations that distinguish the business type. Your business name is legally required to include terms like Limited Liability Company, Limited Company, Corporation, or related abbreviations such as LLC, LC, L.L.C., L.C., or Co.

Using a DBA in Washington

A DBA, or “doing business as,” allows you to legally operate under a different name than that of your legal entity. In Washington, this is known as getting a trade name. You can search for trade names currently in use and register for a new one with the Department of Revenue for $5.

3. Create a business plan

A business plan is your opportunity to outline how your business will work and be successful over time. It helps you get clear on your vision, strategic planning, research, finances, and where you see your business growing in the future. You can write a business plan from scratch, consult examples for inspiration, or use a customizable template.

Your business plan should include:

  • An executive summary
  • A detailed company description
  • Market analysis
  • An outline of the organizational and managerial structure
  • A list of products and services
  • A customer segmentation report
  • A marketing plan
  • A logistics and operations plan

4. Choose a business structure and get started

The most common small business structures are sole proprietorships, limited liability companies, and corporations. More than one option may fit your business, but pay attention to their distinctions to pick a structure that best aligns with your business. There are key elements to know about each business entity:

  • Sole proprietorshipSole proprietorships are the most straightforward way to start a business in Washington. As a sole proprietor, you are not required to formally register your business with the state or federal government because there is no distinction between you and your business. You receive all money from your business and pay taxes on your profits as income to the Internal Revenue Service (IRS). Washington does not have an individual income tax but sole proprietors do have to pay a business and occupation (B&O) tax based on gross income. Rates vary depending on the industry, so be sure to review them. Sole proprietorships are ideal if your business idea has little risk, low overheads, and no employees other than yourself. This is also a flexible option if you may want to transition into another business structure in the future.
  • Limited liability company. Limited liability companies, or LLCs, are a popular business structure because they are separate entities from their owners and provide liability protection. In most cases, you have personal asset protection if your business takes on debt or is sued. Washington does not have corporate or personal income taxes, but as an LLC owner, you will have to pay B&O taxes on your individual tax return at a rate that depends on your industry and gross income. Additionally, cities across Washington may opt to have their own B&O taxes, so you may have to pay a city’s B&O taxes on top of the state requirements. To form an LLC in Washington, submit a Certificate of Formation online to the Secretary of State. It costs $180. However, expedited online services are available for $200 and can be processed within two business days.
  • Corporations. A corporation is a formal business structure that is completely independent of its owners or shareholders. Washington is in a small minority of states across the country where corporations are not taxed twice between corporate taxes and shareholder taxes. This is because Washington does not collect personal income or corporate taxes. As a business owner, however, you do have to pay B&O taxes based on the gross income of your business and industry. Corporations are allowed to sell shares, or portions of the business, and provide substantial liability protection for owners. Becoming a corporation is best for businesses that may need fundraising or strategic investments to grow, or that could be acquired in the future. To incorporate in Washington, file an Articles of Incorporation with the Secretary of State online. It costs $180.

Getting an EIN

If you’re looking to form an LLC or corporation, you will have to apply for a federal employer identification number, or EIN. An EIN identifies your business at the state and federal level so you can file permits and licenses, hire employees, open business bank accounts, and pay taxes. You can apply for your EIN for free online with the IRS. Sole proprietors can choose to use their Social Security number instead so they are not required to apply for an EIN.

5. Obtain a business license and permits

Washington state requires all businesses to apply for a business license. This costs $90 and you can submit your application via the Business Licensing Wizard tool. This tool will find your precise location in Washington, and identify any other regional or state permits and licenses your business may need. Applications that are submitted online take approximately 10 days to fully process.

Your business will then be issued a Unified Business Identifier (UBI) number and the Department of Revenue will contact you directly to arrange the required registrations to collect and remit sales and B&O taxes.

6. Examine insurance options

Mandatory business insurance policies in Washington depend on your industry. You can contact the Office of the Insurance Commissioner of Washington state to see if your industry legally requires certain types of insurance in the state. Other types of business insurance to keep in mind are:

  • Workers’ compensation. Most employers with employees are obligated to have workers’ compensation insurance, which helps to cover the costs of medical expenses for work-related employee injuries.
  • Unemployment insurance. Unemployment insurance, similarly to workers’ compensation, is also legally required. This is a fund that companies pay into to provide temporary income to workers who lose their jobs through no fault of their own.
  • Professional liability insurance. Professional liability insurance protects your business legally if a customer or client files a claim that they were harmed by a professional error on your part.
  • General liability insurance. General liability insurance protects you if a member of the public is injured in your primary place of business.
  • Commercial property insurance. Commercial property insurance protects your business against physical damage from natural disasters, like a hurricane or flood.

7. Understand financial considerations

Your business plan should detail how much money you’re going to need to get your Washington business up and running. Certain fundraising options may be a better fit than others. Here are some different ways you can raise money:

  • Bootstrapping. Bootstrapping can take two forms: saving up your own money to invest and grow your business, or taking your first profits and reinvesting them into the company.
  • Investments. A common route to raise money is taking on angel investors or working with a venture capital firm. An angel investor is an individual who buys equity in startup businesses, whereas venture capitalists invest as a group into more developed businesses with growth potential. These investments are made in exchange for shares, so are only accessible if you’re opening a corporation.
  • Business loans. Small business loans can be microloans, commercial bank loans, or Small Business Administration (SBA) guaranteed loans that are paid back with interest. Other options, like Shopify Capital, provide entrepreneurs with access to startup funds.

8. Market your business

Marketing is the process of attracting your target market to your business and converting them into customers. Make your brand unique by carefully crafting logos, slogans, color schemes, and fonts that align with your message, before developing a thorough marketing plan. Your marketing plan might include strategies for:

  • Paid advertising and promotion. Buy print or digital ads yourself or hire an agency to craft them on your behalf.
  • Social media. Social channels like Instagram, Facebook, YouTube, and TikTok make it easier for customers to discover your brand, and can help promote your products and services.
  • Public relations. Nurture relationships with journalists and publications in the local and national media, which will extend your reach and increase your brand visibility.
  • New business and customer retention. Build relationships with your customers to ensure they come back and keep spreading the word to friends and family.

Starting a business in Washington FAQ

How much does it cost to start a business in Washington state?

It costs $180 to register an LLC or a corporation with the Secretary of State in Washington.

Does Washington have a statewide business license?

Washington requires a statewide business license, which costs $90.

Is Washington a good state to start a business?

Washington has been ranked as the best state in the country multiple times because of the strength of its education, environmental, and business sectors. It is also in the top five states in the country for venture capital investments, making it an excellent place to form a corporation.

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