In my role in the Financial Industry I help small business owners start new business or answer their questions about ‘how to form a business?’
Mostly, these small business owners are individuals with no background in banking or business. So, they end up paying hefty fees to agents to get started.
All of these business owners have one thing in common – a dream and a passion to make it big. I hope this article will simplify business formation in Washington State.
Some of these business owners chose Washington state to register or form their business. The question is why do small business owners chose Washington state to start a new business?
Why is Washington State a Business haven?
There are a lot of reasons Washington State is a great place to start a business.
Firstly, in Washington individuals don’t file personal income tax returns with the state.
Secondly, for small businesses, the first $43,000 of revenue is tax-free in Washington.
But before you can reap these benefits, you have to make it through the actual Washington State business formation process, which can be challenging if not done correctly.
The document you’ll need to form a business are either:
- a Certificate of Formation (for LLCs)
- Articles of Incorporation (for corporations, non-profits).
File your formation document with the Secretary of State.
Whether you’re forming a WA LLC (or a nonprofit, or a partnership) or a WA corporation you should start here.
On the other hand, if you are starting a Sole Proprietorship then you need to start at the Department of Revenue.
While you may file your Washington LLC or Corporation by paper, online filing is straightforward and much faster
You’ll need to provide this information to form your business:
- Exact company name
- Street address and PO box of principal office
- Effective date of formation
- Tenure (duration)
- Class of shares (for corporations only)
- Management type (for LLCs only)
- Name, physical address and mailing address of Washington registered agent
- Signature of registered agent (which can be you).
- Names, addresses, phone numbers and signatures of of signer(s)
While you may file your Washington LLC or corporation by paper, online filing is straightforward and much faster.How to Form A Business in Washington State? Click To Tweet
Wait for your UBI number
UBI stands for “Unified Business Identifier,” which means that multiple Washington state use the UBI to identify your business.
The key is to make sure you receive your UBI number from the Secretary of State—otherwise you could get duplicate numbers from multiple agencies.
If you file online it takes 5 days. If you file by mail without expediting, it may take up to 3 weeks to receive confirmation.
The Secretary of State sends you an email that confirms your business is formed and provides you with your 9-digit UBI number.
Submit your master Business License Application
The Master Business License Application is really a business registration that lets each related agency know what you’re up to. So, you can pay taxes, employment and insurance.
In some cases, you can file this application online (with 5-day processing), and in other cases, you must file by paper (up to 21-day processing).I
It’s important to fill this 4-page application out with care. The way you fill out each section alerts specific agencies to the reports, fees and other requirements you’ll need to submit to them.
Obtain a Federal Tax ID Number for your newly formed business
If you will need to pay federal taxes as a business or will have employees, you are required to get an EIN. You can obtain one yourself online for free!
Apply for other Licenses and Permits
Depending on what business you’re in, you may be able to apply for your specialty license with your Master Business License Application.
In some cases, additional fees and paperwork will still be required even if your specialty license is included.
Most WA cities require you to get a license to do business within the city limits.
Therefore, you may apply for a license for a few cities via the Master Business License Application.
You may also need to apply for zoning and permits, or a contractor’s license.
File your Initial Report
For WA State Corporations and LLCs, an initial report is due 120 days after the day you filed your formation document. If you filed online, you can file your initial report online as well.
You’ll need your UBI number and the application ID when you formed your business.
Get Workers’ Compensation and Unemployment Insurance
If you have employees and indicated that on your master business license application, the WA Department of Labor & Industries will automatically set up a workers’ compensation account for you.
Then the WA Employment Securities Department will set up your unemployment insurance account.
Within 2 weeks, you’ll receive information packets from L&I and Employment Securities, including how much money to deduct from employees’ paychecks, quarterly report instructions, your workers’ comp rate, and workplace health and safety information.
Pay taxes to the Department of Revenue
If you checked certain boxes on your master business application, you should be receiving a packet of information from the Department of Revenue.
To clarify, Washington State has no personal income tax, but they do have a B & O tax on your gross income. Find out more on Washington taxes page.
Keep in compliance
The state of Washington requires what they call an annual license renewal, or annual report, every year. The Secretary of State has the Business Licensing Services handle it for them.
The fee is $71, and you may file online.
This renewal notice arrives 45 days before the due date, your anniversary month.
To conclude, once you have formed your Business you would need to open a Business account at one of the Financial institutes- WellsFargo, Chase or Bank of America or any one of your credit unions.
To start a new business in Washington State you would need to form it. You can pay an Agent to do the registration for you or you can do it yourself.
If you have the time and understanding you can form your business yourself otherwise I would recommend using an agent like LegalZoom.
If this article simplified concepts please share with new & upcoming business owners. You can always contact me to clear any doubts or if you need any assistance. The products displayed will come in handy while you are forming your business.
Disclosure: No compensation from Legal Zoom.
Great article! Lots of useful information. Thank you!