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Washington Business License Basics

Washington Business License Basics

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Washington Business License Basics

Starting a small business in Washington often means registering with several federal, state, and local agencies. Let’s review common Washington business license registrations so your business starts off right.

Related: Guide to starting a business in Washington

Setting Up the Business

Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of entity:

Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.

General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.

Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.

Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.

What Licenses Do Washington Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Washington may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

State of Washington Business License

Washington requires a business license if your business meets 1 or more of the following criteria:

  • The gross annual income for the business is over $12,000 per year.
  • The business is operating under a name other than the owner’s full legal name.
  • The business plans to hire employees within the next 90 days.
  • The business sells a product or provides a taxable service.
  • The business has specialty licenses available through the Business Licensing Service.

To get the Washington business license application, visit the State of Washington Business Licensing Service.

Local Business License

In addition to the state business license, many cities require businesses to be licensed to operate. Rules for business registration vary depending on location and what the business does.  Below are a few cities that have licensing requirements. 

  • Seattle: All businesses operating in the city of Seattle will need to have a Business License Tax Certificate.  The cost of a Seattle business license varies depending on the amount of taxable revenue. 
  • Spokane: All businesses located in or conducting business within city limits will need to obtain a business license.  In addition, businesses with amusement devices, entertainment facilities, transportation services, and mobile food vendors will need additional registration.
  • Tacoma: The Tacoma Tax & License Office issues business licenses for all businesses operating in the city.  Home-based businesses will also need to register for a Home Occupational License, which is a one-time application. 
  • Vancouver: The City of Vancouver requires businesses to be located within city limits or operate within city limits to register for a City Business License. In addition, certain businesses such as taxi companies, food vendors, secondhand dealers, and others will need to obtain a city-issued special license.  Home-based businesses will also need to hold a Home Occupation Permit.   
  • Bellevue: Businesses located in Bellevue or generating over $2,000 annually within city limits will need to register the business with the Bellevue Tax Division.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Trade Name Registration

While not a business license, it’s common for sole proprietorships and partnerships operating under a business name that is different from the full name of the owner(s) to register for a Trade Name (also known as a Doing Business As or DBA) with the Secretary of State’s Office.

Building & Zoning Permits

  • Zoning: Depending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has specific zoning regulations to follow. Depending on city requirements, home-based businesses may need to apply for a home occupation permit.
  • Building Permit: If a facility is being constructed or renovated, a building permit may be needed from the city or county building and planning department.
  • Signage Permit: Some municipalities require a permit before adding signage.

Business Tax Number

Businesses in Washington selling a product or offering certain services will need to register for a Washington sales tax registration number from the Washington Department of Revenue.

Reseller Permit

Businesses purchasing merchandise to resell will usually want to obtain a Washington Reseller Permit to avoid paying sales tax on merchandise resold to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services.  A few common occupations that require licensing in Washington include; appraisers, cosmetologists, home inspectors, limousine services, tattoo studios, and many more.   Additional information, fees, and licensing requirements for professions are available from the Washington State Department of Licensing.

Employer Identification Number (EIN)

Many businesses register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of an individual’s Social Security Number. Corporations, Limited Liability Companies, Partnerships, and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.

There is no cost for an EIN, and it only takes a few minutes to get.

Learn how to apply for an EIN

Next Steps

These are some of the most common business licenses a new business in Washington
will need to register for. While it’s a good start, there are so many different
licenses that may be needed, be sure to double-check with the City Clerk’s
Office, Chamber of Commerce, and/or Economic Development office in your area
before opening your doors.

Washington Business License Basics

Washington Business License Basics

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