How Much Does It Cost to Start a Business in Washington

Starting a business in Washington is cheaper than you might expect. The state charges no corporate income tax, no franchise tax, and no personal income tax. That's the good news. The catch is the business and occupation (B&O) tax, a gross receipts tax you'll pay regardless of whether you turn a profit. Here's what it actually costs to form and operate a business in Washington.

Business Formation Costs

The first expense is registering your business structure with the Washington Secretary of State. Your choice of entity matters, because it determines your filing fees and ongoing tax obligations.

LLC Formation Costs

A Washington LLC costs $180 to form. You file a Certificate of Formation with an Initial Report using the Secretary of State's online Corporations and Charities Filing System (CCFS). Standard processing takes 5 to 10 business days, though the Secretary of State does not publish a guaranteed turnaround time.

If you need your LLC faster, expedited service costs $100 and typically processes within three business days. Same-day service (received before 3:30 p.m. at the front counter) currently runs $100 as well, though the state has announced it may increase to $150 in the future.

Your LLC name must include "Limited Liability Company," "Limited Liability Co.," "L.L.C.," or "LLC." The name must be distinguishable from every other registered business name in Washington and cannot contain restricted words like "bank," "banking," "trust," or "cooperative."

Corporation Formation Costs

Incorporating a C corporation or S corporation costs the same $180 filing fee. You submit Articles of Incorporation with an Initial Report. Processing times and expedited options are identical to LLCs. Most small businesses choose an LLC over a corporation because LLCs offer simpler administration and more flexible tax treatment.

Sole Proprietorship or DBA Costs

If you operate as a sole proprietor under your own name, there is no Secretary of State filing fee. However, if you operate under a trade name (doing business as, or DBA), you must register it with the Washington Department of Revenue. A trade name registration costs $5 per name plus a Business License Application processing fee of $50 to open a business, or $10 if you are adding a trade name to an existing business.

State Business License and Registration

Every business in Washington needs a state business license and a 9-digit Unified Business Identifier (UBI). The Department of Revenue handles this through their online Business License Application system. The processing fee is $50 to open a business. If you are upgrading an existing license or adding endorsements, fees vary by endorsement type.

You must obtain a business license if any of these apply to your situation:

• You operate under a name other than your full legal name
• You plan to hire employees within 90 days
• You sell anything subject to sales tax
• Your gross income is $12,000 per year or more
• You need city, county, or state endorsements
• You owe any tax or fee to the Department of Revenue

Online applications typically take about 10 business days. If you need city or state endorsements, such as a food service license or construction license, processing can take 2 to 3 weeks longer. Mailed applications can take up to six weeks.

If you have a physical storefront or operate in multiple cities, you may also need city-level business licenses. City fees vary by location. Seattle, Tacoma, Vancouver, Spokane, and other major cities have their own business license requirements in addition to the state license. These typically range from $50 to $200 or more depending on your business type and industry classification.

Name Reservation and Registered Agent

Before filing your formation documents, you can reserve a business name with the Secretary of State for $30. A name reservation is valid for 180 days and is useful if you are not ready to file immediately but want to secure the name.

Washington law requires every LLC and corporation to designate a registered agent in the state. The registered agent receives legal documents on your behalf and must have a physical street address (not a PO Box). You can appoint yourself if you have a Washington address, or hire a professional registered agent service. These typically cost $100 to $300 per year. There is no fee to change your registered agent if you make the change yourself.

Ongoing Annual Costs

Once formed, you have annual filings and taxes to budget for.

Annual Report Filing Fee

Both LLCs and corporations must file an Annual Report every year. This costs $70 and is due by the last day of the month in which your business was originally formed. If you formed your LLC in March, for example, your annual report is due March 31 every year. You can file up to 180 days early to get ahead. Late filing carries a delinquency fee, bringing the total cost to $95.

Business and Occupation (B&O) Tax

Washington has no corporate income tax or franchise tax, but virtually every business pays the B&O tax. This is a gross receipts tax calculated on total sales or revenue with no deduction for expenses, labor, or materials. Tax rates depend on your business classification and range from about 1.5% to 2.5%, though some classifications go higher.

The B&O tax applies to gross receipts, not profit. Even a business that loses money may owe B&O tax. For example, a service business classified as "Service and Other Activities" pays 1.5%, while a retailing business pays 0.471% on gross sales from inventory. You must determine your correct B&O classification and file quarterly or annual returns with the Department of Revenue.

Local B&O Tax

Many Washington cities and counties impose their own B&O tax on top of the state B&O tax. Seattle, for example, charges a flat fee plus a percentage of gross revenue for many business types. Local rates and structures vary significantly by location. Always verify local tax obligations when opening in a specific city or county.

Sales Tax Permits

If you sell taxable products or services, you must register for a Washington sales tax permit. There is no fee to register, but you must collect and remit sales tax at 6.5% statewide. Some cities and counties add local sales tax on top of this. Sellers are responsible for accurate collection and monthly or quarterly reporting to the Department of Revenue.

Additional Startup Expenses to Budget

In addition to government filing fees, budget for other startup costs that are not required by law but highly recommended:

• Attorney review: Having a lawyer review your operating agreement or articles costs $300 to $1,000 or more. Not required but recommended for LLCs or corporations handling significant assets or multiple owners.
• Accounting setup: An accountant can help you set up bookkeeping and tax strategy for $500 to $2,000, depending on complexity. Essential for proper B&O tax filing.
• Business insurance: General liability insurance typically costs $400 to $1,500 per year depending on your industry and coverage amounts. Required by most lenders and leases.
• Employer Identification Number (EIN): Getting an EIN from the IRS is free if you apply online. It takes about 15 minutes and is necessary if you hire employees or operate as an LLC taxed as a corporation.
• Office space or equipment: This varies widely by industry and is separate from legal and tax fees.

Cost Comparison by Business Structure

Cost Item	LLC	Corporation	Sole Proprietor with DBA
Formation Filing	$180	$180	$5 to $60
Name Reservation (optional)	$30	$30	$30
State Business License	$50	$50	$50 to $60
Annual Report	$70	$70	N/A
Registered Agent (optional)	$100 to $300/year	$100 to $300/year	N/A
Year One Total (minimum)	$300 to $600	$300 to $600	$55 to $120

Timeline: How Long Does It Take

If you file your formation documents online through the Secretary of State, documents are processed in the order received. Standard processing generally takes 5 to 10 business days, but the office does not guarantee a specific turnaround. Expedited service ($100) typically takes three business days. Same-day service (front counter, $100) is available if you file before 3:30 p.m.

Your state business license application takes about 10 business days online. If you need city or state endorsements, add 2 to 3 weeks. Mailed applications take up to six weeks.

In total, you should expect 2 to 4 weeks to complete formation and licensing if you do not use expedited service. Expedited processing cuts this to about one week.

Free and Low-Cost Resources

Washington offers free business help to get you started:

• Washington Secretary of State: https://www.sos.wa.gov/corporations-charities handles all LLC and corporation filings, name availability searches, and fee schedules.
• Washington Department of Revenue: https://dor.wa.gov/ manages business licensing, B&O tax information, and sales tax registration.
• Washington Small Business Development Center (SBDC): https://wsbdc.org/ offers free business planning, market research, and one-on-one mentoring at no cost.
• U.S. Small Business Administration (SBA) Seattle District: https://www.sba.gov/district/seattle provides federal loan programs, training, and contracting assistance.

Bottom Line on Washington Business Startup Costs

The cost to start a business in Washington ranges from about $55 (sole proprietor with DBA) to $300 to $600 (LLC or corporation) in the first year, not counting city licenses or professional fees. The real ongoing cost is the B&O tax, which applies to your gross receipts regardless of whether you make a profit. Washington's zero corporate income tax and zero personal income tax make it attractive for business owners, but the B&O tax means you need accurate bookkeeping from day one. Budget for professional help early, especially for tax planning and ongoing B&O tax compliance.

Informational Disclaimer: This guide is educational content only and does not constitute legal, tax, or accounting advice. Business formation requirements and costs vary by industry, location, and structure. Consult a Washington attorney or licensed CPA for guidance specific to your situation before filing any documents with the Secretary of State or Department of Revenue.