Washington has no personal income tax, which sounds simple until you learn it taxes business revenue directly instead, through something called the B&O tax. It's a different kind of math than most states, and worth understanding before you file. Here's what it takes to start a business in Washington in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses in Washington. It separates your personal assets from the business's debts and lawsuits.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the Washington Secretary of State's Corporations and Charities Division, the agency that handles business filings statewide. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in Washington by filing a Certificate of Formation with the Secretary of State. The filing fee runs $180 to $200 depending on how you file, and online approval through the Corporations and Charities Filing System typically takes about 5 business days.
Within 120 days of forming, you also have to file an Initial Report, which is free if you bundle it with your Certificate of Formation.
Every LLC needs a registered agent with a physical Washington address, available during business hours. You can act as your own agent, or hire a commercial service.
Washington doesn't require an operating agreement by law, but it's still worth writing one, particularly for multi-member LLCs, to spell out how decisions and profits get split.
Sole proprietorships and DBAs
Sole proprietorships don't file a formation document with the Secretary of State. Every business, including sole proprietorships operating under a trade name, does need to register for a state business license through the Department of Revenue.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Washington doesn't issue a single general business license the way many states don't either, but nearly every business needs the statewide business license through the Department of Revenue's Master Business Application, plus any city-level license your municipality requires. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand Washington taxes
Washington has no state personal or corporate income tax, so LLC members owe nothing to the state on their share of profits directly. Instead, the state collects the Business and Occupation (B&O) tax, a tax on gross receipts rather than net profit, with rates that vary by activity: around 0.471% for retail, 0.484% for wholesale and manufacturing, and 1.5% to 2.1% for services, tiered by revenue. Most very small businesses fall under a threshold that exempts them from filing.
Sales tax starts at a 6.5% state base, with local additions pushing the combined rate to somewhere between 7% and 10.5% depending on where you're located.
6. Stay compliant
Every Washington LLC files an Annual Report with the Secretary of State, due by the last day of the month your LLC was originally formed. The fee is $70. Miss it and you'll owe a $25 delinquency fee; keep ignoring it and the state can administratively dissolve your LLC.
Washington business costs at a glance
| Item | Cost |
|---|---|
| Certificate of Formation (LLC) | $180 to $200 |
| Annual Report (every year) | $70 |
| State business license (first year) | ~$50 to $90 |
| Registered agent service (optional) | $50 to $300/year |
| EIN | Free (IRS) |
| State income tax | None (B&O tax on gross receipts instead) |
| State sales tax | 6.5% + local, up to ~10.5% |
Frequently asked questions
Does Washington have personal income tax?
No, Washington has no state personal or corporate income tax at all.
What is Washington's B&O tax?
The Business and Occupation tax, a tax on gross receipts rather than net profit, with rates varying by activity: around 0.471% for retail, 0.484% for wholesale, and 1.5% to 2.1% for services.
How much does it cost to form an LLC in Washington?
$180 to $200 for a Certificate of Formation, depending on how you file.
When is Washington's Annual Report due?
By the last day of the month your LLC was originally formed, for $70.
Does Washington require an Initial Report?
Yes, within 120 days of formation, though it's free if bundled with your Certificate of Formation.
Fees and rates above come from the Washington Secretary of State and Department of Revenue as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Washington-licensed attorney or CPA about your specific situation.