Use our guide to find out how to open your own business in Washington.
Benefits of Opening a Business in Washington
With 608,956 small businesses, Washington prides itself on an above-average 81% early startup survival rate. Entrepreneurs 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 on 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 94% of Washingtonians can access broadband internet.
Start an Entity in Washington
ZenBusiness offers the following formation services to our customers:
- Washington Limited Liability Company (LLC)
- Washington Professional Corporation
- Washington Corporation
- Washington Nonprofit Corporation
How to Start a Business in Washington
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 company will take some time, planning, and investment. Here’s how to get going.
How to Start a Business in Washington Checklist
- Create a business plan
- Choose a business structure
- Determine your business costs
- Create a business name
- Register your business, get insurance, and open financial accounts
- Market your Washington business
1: Create a business plan
Whatever your idea, 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 organization 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.
Every November, Washington’s Global Entrepreneurship Month brings together experts and resources to help entrepreneurs get underway. As you work through your planning playbook, also consider what “SMART” goals you’ll track, so 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.
Your new business’s 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 investment.
2: Choose a business structure
With no corporate income tax, it can be tempting to immediately set up shop as an S corporation or a C corporation in Washington. Incorporating can be a good choice, but first consider talking with trusted advisors about the pros, cons, and setup costs of a Washington corporation.
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. That means if your sole proprietorship faces debts, financial troubles, or lawsuits, your personal assets could be on the line. All of this also applies to general partnerships.
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 this double taxation while adding liability protection, but they can be challenging to qualify for.
With more separation between business and personal assets, and without the double 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 personal assets, and better position your company for success.
3: Determine your business costs
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 can be to get the right financing, set up your budget, and stay on track with managing cash flow.
Every startup’s costs are different, but some of the most common ones include:
- Entity filing fees and annual reports
- Licenses, permits, and zoning
- Leasing or purchasing office space, storefront, etc.
- Designing and printing business cards, postcards, brochures, or other print marketing materials
- Office supplies and furniture
- Technical equipment: tablets, smartphones, point-of-sale devices, and/or computers
- Bookkeeping and accounting
- Travel and transportation
- Developing, designing, hosting, and updating a company website
Business insurance is another important consideration. From commercial general liability to insurance specific to cannabis dispensaries, remember that different companies need different kinds of coverage.
4: Create a business name
Whether you’re working in your own first and last name, location, services, or a branding message, there’s no one way to name your company.
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.
As part of your branding, you may also consider a trade name, known as a “doing business as” (DBA). 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 vs. footwear sales. Sole proprietorships and general partnerships often use DBAs because otherwise they must do business under the owner’s first and last name, such as Alice Jensen or Steve Kroitsch.
Once you’ve identified an available name that represents your brand, check for available domain names that you can use for your email and 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.
5: Register your business, get insurance, and open financial accounts
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 $90 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.
For $20, the Washington Secretary of State can also send 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. Also secure your 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. These 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.
6: Market your Washington business
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 market. Marketing may include:
- Utilizing SEO on your company website and your online profile in directories such as Google My Business
- Engaging with people on social networks like Facebook, Twitter, and Instagram
- Posting articles or videos to your website, YouTube, email list, and social media
- Asking customers to refer you
- Advertising online, in print, or via broadcast
Examples of Good Businesses to Start in Washington
Washington is a good state for entrepreneurs, but what kind of company should you start? Here are a few ideas to consider:
- Farm with a Community Supported Agriculture (CSA) or buying club
- Food truck
- Information technology
- Craft beverage production
- Commercial or residential cleaning
- Home health care
Opportunity is evergreen in Washington
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 company in Washington.
Washington Business FAQs
How much does it cost to start a business in Washington state?
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.
Is Washington a pro-business state?
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.
What are important industries in eastern Washington?
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.
What is a good city to start a business in Washington?
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.
How much does it cost to file an LLC in Washington state?
The price to file a corporation or LLC in Washington state is $200.
What are the economic profiles of Washington counties?
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.