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Having a business idea but no means of turning it into something real can be frustrating. The great thing is that Washington State is ripe with business growth opportunities. There are plenty of ways to start a business in Washington, but figuring out how to get started can leave you scratching your head.
Our guide below offers a general outline of what to expect when you plan to open a small business in Washington. Check it out and take note of what you can expect in the process.
If you plan to create a business in Washington, you’ll be joining hundreds of thousands of other successful small businesses. Washington prides itself on an above-average startup survival rate, so know that the chances of finding success look good. However, this depends on how good your business idea is and, of course, how you run the business.
Potential small business owners turn to Washington for its innovative spirit, resiliency, quality of life, access to nature, and skilled workforce. Positioned at the US-Canada border and equally distant between vital markets in Asia and Europe, the state is also at the forefront of international trade.
In today’s online world, companies need to enable remote work, IT infrastructure, eCommerce, and online companies. That can be easier in Washington, where a majority of Washingtonians can access broadband internet.
One other benefit of starting a business in Washington is that the state has no corporate or personal income tax. This means that you won’t have to worry too much about your business taxes since the process can be easier in Washington than in other states. However, take note that other tax stipulations may apply.
Whether you’re eyeing rural areas statewide, Spokane in the east, the Tri-Cities area in the south, or the western powerhouses of Tacoma and Seattle, starting your Washington business will take some time, planning, and investment. Here’s how to get going.
Whatever your business idea is, it helps to refine it before you open your doors. For starters, writing a business plan of even a few pages can help you better understand how your company can run, what short-term and long-term goals you’re aiming for, and who your customers (and competitors) are. It’s a crucial first step that helps you land creditors and avoid common pitfalls.
The state’s Department of Commerce Startup site, BusinessHub, and Business Roadmap can be great jumping-off points for navigating bureaucracy and regulations, and for accessing other state resources.
Every November, Washington’s Global Entrepreneurship Month brings together experts and resources to help entrepreneurs get started. As you work through your planning plan, also consider what “SMART” goals you’ll track. You can always know how the startup is doing and whether or not you’re on track for scale, profits, and other business development objectives.
Specialized coaching and funding resources for women, veterans, or entrepreneurs seeking to start companies in rural areas are available, too.
Your new business plan can also help you think through potential problems and solutions. One issue, of course, is how you’ll get startup capital, such as bootstrapping, loans, or private investments. If you have no idea how to start writing a business plan, then our guide can help you.
With Washington having no corporate income tax, it can be tempting to immediately set up shop as an S corporation or a C corporation. Incorporating can be a good choice, but first consider talking with trusted advisors about the pros, cons, and setup costs of a Washington corporation.
Three other common business entity types are the sole proprietorship, the general partnership (GP), and the limited liability company (LLC).
The most commonly used entities, sole proprietorships and GPs, in Washington don’t have to be registered with the state and are quick to set up. However, there’s no separation between personal and business assets. This means that if your Washington business runs into some legal trouble, like a lawsuit, your personal assets, as an owner, could be used to pay off debts.
C corporations provide liability protection, but they also tax your business twice — once at the corporate level and once on the members’ personal tax returns.
S corporations avoid double taxation that C corporations have to deal with. They also add liability protection, but they can be challenging to qualify for.
With more separation between business and personal assets, and without the taxation that can happen in C corporations, some entrepreneurs prefer starting an LLC. While annual state filings are required for both LLCs and corporations, the LLC can be a great way to minimize taxes, shield your assets, and better position your company for success.
If you’re still on the fence about which type of business entity to start, speak to a business attorney before making a decision.
From startup costs to ongoing fixed and variable expenses, your organization will need to cover its costs. As part of your planning, the better you can estimate those costs, the better positioned you’ll be in to get the right financing, set up your budget, and stay on track with managing finances.
Every startup’s costs are different, but some of the most common ones include:
Business insurance is another important consideration. From commercial general liability to insurance specifics to cannabis dispensaries, remember that different companies need different kinds of coverage. Do some research about different business insurance types and carriers before deciding on a policy.
Whether you’re working in your own first and last name, location, services, or branding message, there’s no one way to name your company. A business name will take a lot of consideration since this is what the public will know you as. Be sure to come up with a list of possible names and think about how each will work in your favor.
Your startup can’t adopt a name already in use, and there can be legal repercussions if you do. As you consider business names, start with the Washington Secretary of State Business Entity Search.
Need some time to sort out required filings? For $30, Washington will let for-profit entities reserve a name for 180 days. We can also reserve your business name.
As part of your branding, you may also consider a trade name, known as a “doing business as” (DBA) name. That can help you do business under a more marketable name while using a different one for your overall company.
Corporations and LLCs might use DBA names for different lines of business, such as clothing and footwear sales. Sole proprietorships and general partnerships often use DBAs because, otherwise, they must do business under the owner’s first and last name. You can register your DBA name with us.
Once you’ve identified an available name that represents your brand, check if it’s available as a domain name that you can use for a website. This is also a good time to reserve accounts or handles on social networks that may be part of your marketing outreach and engagement. If you have a domain name idea, you can register it with us.
Prior to opening your doors, your LLC, corporation, or DBA will need to be registered with the state. Depending on your industry or profession, you may need to file for a state business license from the Washington Department of Revenue, and there’s a fee for your license application. Different industries may have other licensing requirements, too.
Washington does levy other business taxes, so include quarterly and annual tax planning as part of your cost forecasts.
The Washington Secretary of State’s office can send you a Certificate of Existence for your organization. This certificate proves that your company is in good standing with the state. Your county or city may have other zoning and permitting requirements to follow.
Be sure to secure business insurance, such as workers’ compensation, professional liability, or commercial property.
Along with state filings, you can get a federal employer identification number (EIN) from the IRS. This serves as your federal tax ID number that you’ll use when paying taxes, but you can also use it when opening business bank accounts, such as setting up checking accounts and credit cards. This is a great option if you prefer not to handle your personal and business expenses with a single account.
A business bank account can help you start managing cash flow and build credit for your company, too. For sole proprietors, however, you can opt to use your social security number as your tax ID, if you prefer.
If you don’t have a small business bank account yet or aren’t sure where to start, we can help you.
Opening your doors is one thing, but how will you make customers aware of your company? Even more importantly, how will you convince people to try your products and services over your competitors?
Marketing encompasses all the ways you can spread the word about your company to your target audience. Marketing may include:
Washington is a good state for entrepreneurs, but what kind of company should you start? Here are a few ideas to consider:
The Evergreen State is open for business. With the right idea, an understanding of the problem your company can solve for your target customer, some financing, and a good business plan, you can be on your way to becoming the owner of a successful business in Washington. We offer many services that can help you start your business, so make your idea a reality today!
Check out this guide from Washington about costs, taxes, and other financial considerations for companies based in the state. For example, businesses can review the database for information on the impact of government costs on wages and health care insurance, or how costs change depending on company size or industry.
Washington continually implements measures and programs to enhance the state’s business climate. The state has been fostering investments and improvements throughout Washington, from industry diversification in eastern Washington to $16 billion in updates and upgrades to transportation infrastructure.
From the Cascades to the Idaho border, eastern Washington is home to key industries such as agriculture, tourism, wine, high-tech manufacturing, and health services.
Spokane and Seattle have been named two of America’s Best Cities for Starting a Business 2020. Also consider Tacoma, Olympia, and the Tri-Cities area of Kennewick, Pasco, and Richland.
The price to file a corporation or LLC in Washington state is $200.
Each of Washington’s 39 counties has its own economic profile, challenges, key industries, and areas of growth and opportunity. For example, three colleges in Walla Walla County help fuel a skilled workforce, whereas Kitsap County, at the southern end of Puget Sound, leverages both its waterfront location and proximity to Seattle.