Kennewick, Pasco, Richland and West Richland Business Licenses: Four Different Per-Employee Formulas Compared

If you plan to open a business in the Tri-Cities area, you will file one state application and then pay a city fee. The state side works the same everywhere in Washington. The city side does not. Kennewick, Pasco, Richland and West Richland each calculate their business license fee differently. Three of the four use a per-employee formula. West Richland uses a revenue-based fee instead. This guide shows you how to gather your numbers, apply each city's formula, and complete the state steps that come with a pasco wa business license or any of the other three cities.

This article is informational, not legal or tax advice. City fees and thresholds change, so confirm current figures with each city before you budget. If your structure, payroll, or licensing situation is complicated, talk with a qualified attorney or CPA.

What You Need Before You Start

Gather these items before you open the Business License Application through the Department of Revenue's Business Licensing Service (BLS):

• Your legal business name and any trade name you plan to operate under
• Your entity filing details. Corporations, LLCs and LLPs must already be filed with the Secretary of State. Sole proprietors and general partnerships do not file there.
• A Washington street address for the business location, plus your home address if you run a home occupation
• Payroll records showing total hours worked per year, so you can calculate full-time equivalents (FTEs)
• An estimate of annual gross income, which decides whether Pasco or West Richland's low-revenue thresholds apply
• A list of products or services you will sell, since sales tax applies to most retail sales
• A payment method for state and city fees

Step 1: Confirm Your Entity and Name

If you are forming a corporation or LLC, file first. An LLC name must include Limited Liability Company, Limited Liability Co., L.L.C. or LLC, and it must be distinguishable from every other business name on record with the Secretary of State. The name cannot contain words such as bank or trust. The Certificate of Formation with Initial Report costs $180 and is filed through the Corporations and Charities Filing System at ccfs.sos.wa.gov. If you need to hold a name while you prepare paperwork, a name reservation costs $30 and lasts 180 days.

Every business must also designate a registered agent in Washington. The agent must have a physical street address in the state, and PO Boxes and private mailbox addresses are not accepted. There is no fee to change the registered agent or registered office.

Step 2: Calculate Your FTE Count

Most of the city formulas depend on FTEs, not headcount. Kennewick defines one FTE as total annual hours divided by 1,920. Two employees who work 1,000 hours each and one who works 2,000 hours total 4,000 hours, or about 2.08 FTEs. Part-time workers count for less than a full FTE, which can lower your fee. Ask each city how it counts FTEs before you file, because the method is not identical across all four cities.

Step 3: Apply Your City's Formula

Use the table below to find the formula that matches your city. Figures reflect the City of Kennewick, Pasco, Richland and West Richland business license pages as of October 26, 2026.

City	Base fee	Employee charge	Key rules
Kennewick	$55	$5 per FTE	FTE equals hours divided by 1,920. Home occupations use the same formula under KMC 18.42.090.
Pasco	$0 at $4,000 gross or less, otherwise $80	$20 per FTE	Total fee is capped at $5,000, which applies at 250 or more employees. Home occupations fall under PMC 25.66.
Richland	$40	$12 per FTE, with the first two FTEs free	Rental licenses cost $2 per unit. Landlords with fewer than three units are exempt.
West Richland	$0 at $5,000 or less, otherwise $40 in year one	None. The renewal fee is $45.	Revenue-based, not per employee.

Here is how the math works for a business with 5 FTEs and more than $5,000 in gross income:

• Kennewick: $55 plus ($5 times 5), for a total of $80
• Pasco: $80 plus ($20 times 5), for a total of $180
• Richland: $40 plus ($12 times 3), for a total of $76, because the first two FTEs are free
• West Richland: $40 in the first year, with no employee charge

These totals are illustrative. They do not include state fees, endorsement fees, or a trade name registration.

Step 4: Handle Home Occupations and Rentals

If you run the business from your home, do not assume you can skip the city license. Kennewick applies its standard formula to home occupations. Pasco handles home occupations under PMC 25.66, so confirm the details with the City of Pasco before you file. Richland's rental license is separate from its employee formula. Landlords with fewer than three units are exempt from the $2 per-unit charge, so confirm your unit count with the city before you assume the exemption applies.

Step 5: File the State Business License Application

Washington requires a statewide Business License Application for most businesses. You need it if you plan to hire employees within 90 days, sell taxable products, earn $12,000 or more in gross income per year, operate under a name other than your full legal name, or need city or state endorsements. Corporations, LLCs and LLPs must file with the Secretary of State before they submit the application. Through the BLS, you will receive your 9-digit Unified Business Identifier (UBI) and request any city endorsements.

The fees are:

• Opening a business: $50 processing fee, plus separate endorsement fees
• Trade name: $5 for each trade name, plus a $10 processing fee when the filing is for another purpose, such as adding a trade name to an existing business

Online applications generally take about 10 business days. If a city or state endorsement needs approval, add 2 to 3 weeks. Mailed applications can take up to six weeks. Apply at dor.wa.gov/open-business/apply-business-license, and register trade names through dor.wa.gov/manage-business/grow-business/register-trade-names.

Step 6: Add Sales Tax, Health, and Zoning Checks

The state sales tax rate is 6.5%. Combined rates for these cities are 8.8% in Kennewick, 8.9% in Pasco, 8.8% in Richland and 8.7% in West Richland for the fourth quarter of 2026. Rates change, so check the Department of Revenue before you set your prices.

None of these four cities adds its own business and occupation (B&O) tax. Your statewide B&O obligation still applies, because Washington uses a gross receipts tax instead of a corporate or personal income tax on wages.

If you sell food, the Benton-Franklin Health District issues the permit, so contact it before you open. Cannabis businesses face zoning limits and local bans that vary by city, so check each city before you sign a lease. Some trades need a separate state license. For example, the Department of Labor and Industries (L&I) registers contractors and licenses electrical and plumbing work.

Step 7: Calendar Your Renewals

Your city renewal is only one recurring deadline. If you formed an LLC or corporation, the annual report costs $70 and is due by the last day of the month in which the entity was originally formed or registered each year. You can file up to 180 days early. A late filing carries a delinquency fee, bringing the total to $95. West Richland's renewal is $45, and Pasco's employee charge may change as your headcount changes, so review your FTE count each year.

Common Mistakes to Avoid

• Searching for the wrong Pasco or Richland. Pasco, Washington is not Pasco County, Florida. Richland also has cities in Wisconsin and Mississippi. Add WA to your search and your application.
• Counting heads instead of FTEs. A part-time employee who works 960 hours does not equal a full FTE in the Kennewick formula.
• Assuming a city B&O tax applies. These four cities do not levy one, but the state B&O tax still applies to most businesses.
• Using a PO Box for your registered agent. Washington requires a physical street address in the state.
• Filing the city license before the state application. The BLS application is the statewide starting point for the endorsements you need.
• Forgetting the health and zoning checks. Food businesses need Benton-Franklin Health District approval, and cannabis locations need zoning confirmation.

What to Expect

A small business with a few employees may find that its city fee is modest, while a business that grows past the formula's thresholds may see the total rise quickly. Online state filings generally move faster than mailed ones, and endorsements can extend the timeline. Your actual total will depend on your FTE count, gross income, home occupation status, and whether you need food, rental, or cannabis-related approvals, so treat the figures in this guide as a starting point and verify each one with the agency that issues it.

Next Steps

Confirm your city's current formula with the city's business license office, check the Department of Revenue for the current combined sales tax rate, and contact the Benton-Franklin Health District if you sell food. Then complete the Business License Application through the BLS. Before you sign a lease, lend, or hire, consult a qualified attorney or CPA to review your structure and tax position.