How to Start a Business in Washington State: A Step-by-Step Checklist

Starting a business in Washington is easier than most people expect, but the order you do things in matters. Get the steps out of order and you end up with a bank account under the wrong name, a business license that doesn't match your LLC, or months of untracked expenses. Here is the sequence we walk our new clients through.

1. Decide what you're selling and who you're selling to

Before any paperwork, be clear on what your business does. Your activity determines which Washington taxes apply to you, whether you collect sales tax, and whether you need special licenses (contractors, food businesses, child care and many others have extra requirements).

2. Choose a business structure

Most new owners choose between a sole proprietorship and a limited liability company (LLC). A sole proprietorship needs no state formation filing, but offers no separation between you and the business. An LLC costs a little more to set up and maintain, but it creates a separate legal entity and is the most common choice for small businesses. Corporations and partnerships are also options. (See our post LLC vs. Sole Proprietorship for a full comparison.)

3. Pick and check your business name

Search the Washington Secretary of State's business records to make sure your name is available. Also check that the domain name and social media handles are free. If you plan to operate under a name that's different from your legal name or LLC name, you'll register a trade name.

4. Form your entity with the Secretary of State

If you're forming an LLC or corporation, you file online with the Washington Secretary of State. When your entity is approved, you receive a UBI number (Unified Business Identifier), which is your business's ID number with Washington State agencies.

5. Get your EIN from the IRS

An Employer Identification Number is your business's federal tax ID. It's free on the IRS website and takes minutes. You'll need it to open a business bank account, hire employees, and file business tax returns.

6. Apply for your Washington business license

Most businesses need a Washington State business license through the Department of Revenue's Business Licensing Service. Many cities also require their own license or endorsement. This step also registers you with the Department of Revenue for B&O tax and, if needed, sales tax.

7. Open a business bank account

Use a separate checking account (and ideally a separate credit card) for business only. This one habit saves more bookkeeping headaches than anything else on this list.

8. Set up your bookkeeping from day one

Choose accounting software, connect your business bank account, and decide how you'll save receipts. Starting clean is far cheaper than cleaning up a year of mixed transactions later.

9. Learn your tax and filing calendar

You'll likely have federal income tax, self-employment tax, Washington B&O tax, possibly sales tax, and an annual report for your LLC. Put every deadline on a calendar now.

10. Get the right insurance and contracts

General liability insurance, a simple client agreement, and (for LLCs) an operating agreement protect the business you just built.

The bottom line

Starting a Washington business is a series of small, manageable steps. The owners who struggle are usually the ones who skip step 7 or step 8 and try to sort out their finances at tax time.

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Need help getting this right? TRIG Bookkeeping & Tax Services helps new business owners in Washington with company registration, monthly and annual bookkeeping, and government compliance. Contact us to talk about your business.

This article is general information, not legal or tax advice for your situation. Tax rules and fees change, so confirm current details with the IRS, the Washington Department of Revenue, or a qualified professional.