Start a Business in Washington

Washington's appeal starts with what it does not charge. The state has no personal income tax, so profits that flow through an LLC or partnership to your personal return are not taxed a second time at the state level the way they are in most of the country. For a solo owner or a small partnership, that difference compounds year after year.

What Washington does have is a business and occupation (B&O) tax — a tax on gross receipts rather than net profit, administered separately by the Department of Revenue. It is unusual, and it catches new owners off guard, because it applies to revenue even in a year the business loses money. B&O is filed and paid through the DOR, not the Secretary of State, and the rate depends on your business classification. Budgeting for it from day one is one of the smartest things a new Washington owner can do.

On the formation side, the mechanics are clean. The Washington Secretary of State, Corporations & Charities Division runs the registry, and nearly everything happens inside the Corporations and Charities Filing System (CCFS) at ccfs.sos.wa.gov — name searches, formation filings, annual reports, and amendments. When your entity is created, the state assigns a Unified Business Identifier (UBI), a nine-digit number that ties your registration to the Department of Revenue, Labor & Industries, and Employment Security, so agencies recognize the same business across the board. From Seattle software companies to Spokane trades to Puget Sound maritime outfits, a wide spread of businesses form here, which is exactly why picking the right entity matters — the best structure for a freelancer is not the one for a startup chasing a priced round.

Washington recognizes five formation types that together cover almost any venture. Here is how they actually differ.

LLC — the flexible default

A limited liability company is what most new Washington businesses register, and for good reason. It puts a liability shield between your personal assets and the company, keeps taxes simple through pass-through treatment, and asks for very little ongoing formality. It works with one member or a dozen, for a storefront or a consulting practice, and it can later elect S-corp or C-corp tax treatment without being torn down and rebuilt. When you are not certain what you need, the LLC is almost always the right place to begin.

Corporation — built to raise capital

A corporation issues stock, is governed by a board of directors, and operates through officers. That framework is more rigid than an LLC, but it is precisely what venture investors and startup accelerators expect. If you intend to raise a priced round, hand out stock options to early employees, or one day go public, the corporation is the vehicle designed for those moves. Washington is home to a deep technology and startup ecosystem, and companies planning to raise outside money overwhelmingly incorporate rather than form an LLC.

LP — passive backers, one managing partner

A limited partnership joins a general partner who runs the business and bears the liability with one or more limited partners who contribute capital but stay out of daily management. It is a long-standing structure for investment funds, real-estate syndications, and family holdings, where a few people steer and the rest simply fund. The limited partners' exposure is capped at what they put in, as long as they stay passive.

LLP — a shield for professional partners

A limited liability partnership is a general partnership with a liability shield bolted on, so no partner is personally answerable for another partner's negligence or malpractice. It is the standard pick for groups of licensed professionals — law firms, accounting practices, architecture and engineering groups — who want to run a shared practice without shouldering one another's individual liabilities.

Nonprofit — a mission instead of an owner

A nonprofit corporation has no owners and issues no stock. It exists to advance a charitable, educational, religious, or civic purpose, and incorporating in Washington is the first step toward 501(c)(3) federal tax-exempt status with the IRS. Incorporation and tax exemption are two separate jobs: the nonprofit filing creates the organization, and the exemption application to the IRS comes afterward. Washington also asks charities that solicit donations to register with the same Secretary of State division, so the compliance path is a little longer than for a for-profit.

Most founders can settle the question with a handful of honest answers.

Will you raise venture capital or grant stock options? If so, form a corporation. Investors, cap tables, and option plans are all built around corporate shares, and converting an LLC later costs more than starting correctly.

Are you a group of licensed professionals opening a practice together? An LLP gives each partner a shield against the others' liabilities while preserving the partnership's flexibility.

Do you have backers who want to fund the business but not run it? A limited partnership lets a general partner manage while limited partners stay passive with their exposure capped at their contribution.

Are you building a mission-driven organization rather than a profit-making one? A nonprofit corporation is the structure that opens the door to tax-exempt status, grant eligibility, and tax-deductible donations.

Everything else, or still deciding? Form an LLC. It protects your personal assets, keeps taxes and paperwork light, and fits the overwhelming majority of small and growing Washington businesses. You keep the option to change tax treatment down the road without dismantling the company.

One Washington-specific note worth weighing: because the B&O tax lands on gross receipts regardless of entity type, the choice between an LLC and a corporation here is driven less by state tax and more by how you plan to raise money and share ownership. Each entity page on this site shows the current Washington filing fee next to our service price, so you can compare the real numbers before you commit.

Whichever entity you pick, the core steps line up, and none of them are difficult once you know the order.

1. Choose and clear a name. Your name has to be distinguishable from every other entity already registered with the Secretary of State. A free search inside CCFS tells you in moments whether your name is available, and each entity type carries its own required designator — "LLC," "Inc.," "L.P.," and so on. Certain words are restricted or need extra approval.

2. Appoint a registered agent. Washington requires every entity to name a registered agent with a physical street address in the state who is available during business hours to accept legal service and official notices. You can act as your own agent, but many owners use a commercial service to keep their home address off the public record and to make sure nothing time-sensitive is ever missed. The agent must consent to the appointment.

3. File your formation document with the state. That is the Certificate of Formation for an LLC, the Articles of Incorporation for a corporation or nonprofit, or the equivalent certificate for a partnership, filed through CCFS at the Corporations & Charities Division. Once the state accepts it, your entity legally exists and receives its UBI number. Standard online processing generally runs about a week, with expedited service available for an added fee.

4. Handle the initial report and your EIN. Washington asks new entities to file an initial report within 120 days of formation, confirming your governors, agent, and address — it is easy to forget in the rush after filing. Separately, get an EIN from the IRS; it is the business's federal tax ID, it is free directly from the IRS, and you need it to open a bank account, hire, and file taxes. Any service that charges you to "obtain" an EIN is billing you for something the government gives away.

5. Register for taxes and stay compliant. Most Washington businesses also register with the Department of Revenue for a business license and B&O tax reporting, often through the state's Business Licensing Service. Then there is the recurring obligation: every entity must file an annual report with the Secretary of State, due each year on the anniversary of formation, to stay active and in good standing. An anniversary deadline is easy to lose track of precisely because it is different for every business, so it is the one recurring date every Washington owner should mark down. Depending on your entity, you will also keep internal governance documents current — an operating agreement for an LLC, bylaws for a corporation or nonprofit, or a partnership agreement.