Washington is home to one of the country’s strongest economies, and its lack of a personal or corporate income tax draws many founders. But "no income tax" doesn’t mean "no business tax." Washington taxes businesses on their gross receipts through the Business and Occupation (B&O) tax, and its payroll programs are more extensive than most states’. Here’s how to form a Washington LLC and stay compliant.
What a Washington LLC costs
Table of Contents
| Item | Cost | When |
|---|---|---|
| Certificate of Formation | $200 online ($180 + $20 processing); $180 by mail | At formation |
| Initial report | Free if filed with formation; $10 if filed separately | Within 120 days of formation |
| Business License Application (UBI) | State application fee, plus any city or state endorsements | Before you start doing business |
| Annual report | $70 | By the last day of your anniversary month, each year |
| Late annual report | $25 late fee | If filed late |
Step 1: Choose your LLC name
The name must include "limited liability company", "limited liability", "limited", "LLC", "L.L.C." or "Ltd." and be distinguishable from other names on file. Search the Secretary of State’s records, and check federal trademarks, domains and social handles using our business name checklist.
To operate under a different name, register a trade name through the Department of Revenue’s business licensing service.
Step 2: Appoint a registered agent
Every Washington LLC needs a registered agent with a physical Washington address, available during business hours. You can serve yourself, name another adult or use a commercial registered agent.
Step 3: File the Certificate of Formation and initial report
File a Certificate of Formation with the Secretary of State through the Corporations and Charities Filing System (CCFS), and pay $200 online. File your initial report at the same time; it’s then included at no extra cost. If you file it separately, it costs $10 and is due within 120 days of formation.
Online filings are usually processed within a couple of business days.
Step 4: Get your business license and UBI number
This is the step that makes Washington different from most states. After forming the LLC, apply for a business license through the Department of Revenue’s Business Licensing Service. Approval issues your Unified Business Identifier (UBI), a single number used across state agencies for taxes, unemployment insurance and licensing.
Through the same application you can:
- Register for B&O tax and retail sales tax with the Department of Revenue.
- Add city endorsements for many Washington cities, and state endorsements for regulated activities.
- Register a trade name.
Step 5: Create an operating agreement
Washington doesn’t require you to file an operating agreement, but every LLC should have one, covering ownership, management, profit sharing and what happens when members join or leave.
Step 6: Get an EIN and open a bank account
Apply for a free EIN from the IRS online, then open a business bank account with your formation documents, UBI and EIN. See choosing a business bank account.
Step 7: Understand the B&O tax
The Business and Occupation tax is Washington’s substitute for an income tax. It applies to gross receipts, the total value of your sales or income, not profit, so you can owe it even in a year you lose money. Rates depend on your classification, such as retailing, wholesaling or services, and some cities, including Seattle, add their own B&O tax.
Washington offers a small business B&O tax credit that reduces or eliminates the tax for businesses with low B&O liability, and very small businesses may qualify for a reduced filing frequency. Your filing frequency (monthly, quarterly or yearly) is assigned by the Department of Revenue.
If you sell taxable goods or services, you’ll also collect and remit retail sales tax, which combines state and local rates.
Step 8: File your annual report on time
Every Washington LLC files an annual report through CCFS by the last day of its anniversary month. The fee is $70, and filing late adds a $25 fee. An LLC that keeps failing to file can be administratively dissolved.
How a Washington LLC is taxed
There’s no state personal or corporate income tax, so Washington doesn’t tax your LLC’s profits as income. Owners still pay federal income tax and self-employment tax. At the state and local level, the main taxes are B&O tax, retail sales tax and, where applicable, city B&O and license taxes.
Hiring your first employee in Washington
Washington employers have several state programs beyond the federal steps in our first employee guide:
- Unemployment insurance through the Employment Security Department.
- Workers’ compensation through the Department of Labor and Industries. Washington is one of the few states where most employers must buy coverage from the state fund rather than private insurers.
- Paid Family and Medical Leave premiums.
- WA Cares, the state’s long-term care insurance program, funded by employee premiums.
- Paid sick leave for employees, and Washington’s relatively high state minimum wage.
Your Washington LLC compliance calendar
| Deadline | Filing | Paid to |
|---|---|---|
| Last day of your anniversary month, yearly | Annual report ($70) | Secretary of State |
| Yearly, with license renewal | Business license and endorsement renewals | Department of Revenue |
| Monthly, quarterly or yearly (assigned) | Excise tax return: B&O and sales tax | Department of Revenue |
| Quarterly | Unemployment, workers’ comp and paid leave reports | ESD; L&I |
| City deadlines | City B&O or license taxes, where they apply | Your city |
Example: state costs for your first two years
For a single-member LLC filing online and acting as its own registered agent:
| Year 1 | Year 2 | |
|---|---|---|
| Certificate of Formation with initial report | $200 | — |
| Business license application | State fee plus endorsements | Renewal fees |
| Annual report | — | $70 |
Add B&O and sales tax based on your receipts, any city endorsements and professional licenses. Use our startup cost calculator to plan.
Washington rules for common types of business
Contractors. Construction contractors must register with the Department of Labor and Industries, carry a bond and insurance, and electricians and plumbers need their own licenses. Register before bidding or advertising. See our home services industry profile.
Food businesses. Restaurants and food trucks are permitted by local health departments. Washington’s cottage food permit, issued by the state agriculture department, allows some home-produced foods to be sold. See our cottage food business guide.
Childcare. Child care centers and family homes are licensed by the state’s children, youth and families department. See our home daycare guide.
Washington or Oregon? A note for border businesses
Many businesses around Vancouver, Washington serve customers on both sides of the Columbia River. The two states take opposite approaches: Washington has no income tax but taxes gross receipts and collects sales tax, while Oregon has an income tax and no general sales tax. If your business regularly operates in both, you may need to register in both and follow each state’s rules. Talk to an accountant who works with cross-border businesses before you decide where to form and where to base your operations.
Using the small business B&O credit
Many new Washington businesses owe little or no B&O tax in their early years thanks to the small business B&O tax credit, which is calculated on your excise tax return. Two practical tips:
- File every return, even when you owe nothing. Missing a return can bring penalties, and the credit only applies when you file.
- Track gross receipts by classification. If your business has more than one type of income, such as retail sales and services, each may be taxed at a different B&O rate.
Mistakes to avoid
- Assuming no income tax means no business tax. B&O tax applies to gross receipts, even without profit.
- Starting business before getting a business license and UBI.
- Missing city endorsements or city B&O tax, especially in Seattle and other large cities.
- Doing construction work without L&I registration.
- Forgetting the initial report if you didn’t file it with formation.
Frequently asked questions
How long does it take to form a Washington LLC? Online filings are often processed within one or two business days. The business license application can take longer.
Do I need a business license if I work from home? Generally yes, if you’re doing business in Washington, though some very small businesses may be exempt from some requirements. Check with the Department of Revenue.
Can I be my own registered agent? Yes, with a physical Washington address where you’re available during business hours.
Do I owe B&O tax if I made no profit? Possibly. It’s based on gross receipts, but the small business credit reduces or eliminates it for many small businesses.
Next steps
Read the Start a Business A–Z guide, see hiring your first employee, and plan with the break-even calculator.
This guide is general information, not legal or tax advice. Fees and rules change; check the Washington Secretary of State and Department of Revenue before you file.
Sources
- Start Business By State, Washington requirements (updated April 2026)
- Zenind, Washington LLC cost guide
- File.Business, Washington filing requirements verified June 2026
- Washington Department of Revenue
Last reviewed October 18, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
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