How to start a business in Washington state

Washington is home to over 657,000 small businesses as of 2022. With many thriving and diverse industries, your big idea could help grow The Evergreen State’s small business numbers!

Starting a business in Washington State could be an exciting step in your career. Small business ownership gives you more control over your work-life balance, pay, and the people you work with. However, it takes a fair amount of preparation to start a business and set it up for success.

This article covers how to start a small business in Washington. It discusses who needs to be licensed in Washington state, registering your business name, Washington business insurance options, and other essential steps to help you operate safely and legally.

Overview

• Researching and writing a business plan
• Choosing an ownership (legal business) structure
• Picking a business name
• Registering your business and getting licenses and permits
• Tax IDs
• Opening business bank accounts
• Finding funding for your business
• Protecting yourself with business insurance
• Marketing your small business

Let’s get started!

1. Research and planning

You may have a good business idea, but research and planning could make it great. Understanding your local market and researching your competitors may reveal useful information. There might be gaps in the market that your products and services can help fill. How your competition advertises and prices its products and services may help you brainstorm ways to make your business stand out from the crowd.

This research can help you write a business plan, a ‘blueprint’ for running your business during the early months and years. A business plan may be required to secure funding (more on that later), but it can also help inform important business decisions and track your progress.

2. Choose an ownership structure

Washington small businesses must choose a legal ownership structure for their business. Each has its own advantages and obligations. An accountant or small business lawyer can help you choose the most appropriate structure for your needs.

Common ownership structures for small businesses in Washington include:

• Sole proprietors – An individual or married couple doing business on their own. This is the easiest type of business to form and has fewer legal controls and taxes. However, you are liable for all business debts as the owner(s).
• General partnerships – Two or more people (usually not a married couple) doing business together. This is like a sole proprietorship, but each partner is equally liable for business debts.
• Corporations – A complex business structure that generally has increased licensing fees and legal obligations than other forms. There may be tax or financial benefits to forming a corporation.
• Limited Liability Companies (LLCs) – A business structure that combines many of the benefits of sole proprietors/partnerships and corporations. Individuals are typically not liable for business debts other than taxes.

3. Pick your business name

As you pick a business name, you may want to consider a few factors:

• Will the name appeal to potential customers?
• Will it work well with graphic design and marketing?
• Is anyone else using this business name? Will you be confusing customers or infringing on a trademark if you use it too?

Business name registration in Washington state is done through the Department of Revenue. Sole proprietors and partnerships must register “doing business names”—names other than your legally given names.

Corporations and LLCs will file a legal entity name when they register their businesses (more on that in the next step). However, if you are operating under a different name, you must also register your “doing business name”.

4. Register and license your business

Registering a business and getting a business license for Washington State may be a two-step process, depending on the ownership structure chosen.

Sole proprietors need a business license if they meet certain criteria, such as using a “doing business name”, selling products or services that require the collection of sales tax, or starting a business that requires city, county, and state endorsements. Full details are available on the Department of Revenue website.

Partnerships, corporations, and LLCs need a business license. However, they must register or form their businesses with the Washington Secretary of State before applying for a business license.

You may also need other licenses and permits to run your business. For example, many service providers and trades need professional licenses to work in their industry. The Department of Revenue’s Business License Wizard can help you find relevant licenses for your business.

5. Apply for tax IDs

Many small businesses in Washington may need to apply for an Employer Identification Number (EIN). These are given by the IRS and used to file your federal taxes, process payroll and open bank accounts. Visit the IRS website to see if you are required to have an EIN.

When you register your business with the Washington State Department of Revenue, you will automatically receive information about filing your state business taxes.

6. Open bank accounts

LLCs and corporations may be required to have business bank accounts separate from their personal finances. This is optional for sole proprietors but may still be advisable. Keeping your business and personal money separate can make it easier to track and understand if you are meeting your sale and growth goals.

7. Find funding

Outside funding is necessary for many small businesses. This early capital can help you launch your business and pay your bills until you turn a profit. Bank loans, small business grants, and angel investors (individuals who invest personal funds into startups) can all help you start a business in Washington State.

8. Consider business insurance

For many small businesses in Washington, business insurance is an essential part of protecting their finances. Business insurance helps cover unplanned expenses that could devastate your finances or, in a worst-case scenario, force you to permanently close your business.

There are many types of insurance that you might consider, including:

• Errors and Omissions – Washington professional service providers may need this coverage to maintain a professional license or work with specific clients.
• General Liability – You may need this coverage to lease commercial space for your business or to work with specific clients.
• Business Owner’s Policy – This coverage can help you handle unexpected events or interruptions to your business operations.

9. Market your business

Finding new customers is essential for all small businesses. Marketing helps you attract leads and turn them into loyal customers.

There are many ways to market your Washington business. You will likely use a variety of methods, such as:

• Branding – Creating a logo, choosing fonts and colors, selecting images and creating a tone of voice that makes your business instantly recognizable.
• Building an online presence – Building a business website, setting up social media accounts, and listing your business on Google Maps and other search engines.
• Creating content – Posting quality content on a business blog, social media, or other websites.
• Advertising – Running ads online (through social media and on other websites) or in the real world (radio, TV, print ads, newspapers, printed flyers, billboards, sponsorships, etc.)

Grow your small business success

As you can see, a lot of work goes into starting a business in Washington State. However, this effort may be well worth it. Small business ownership can give you greater control of your career and more satisfaction in the work you’re doing.

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