Washington state business license: who needs one and how to apply

Who needs a Washington state business license

Washington issues one state business license through the Department of Revenue (DOR) Business Licensing Service. The DOR's Business License Application is a simplified form used to apply for many state and city endorsements, registrations, and permits, so the license and many endorsements can go on one filing. The DOR's apply for a business license page at dor.wa.gov lists the conditions below. If any one of them applies to you, you register and get the license.

Income is only one of the conditions. A shop with very little income still needs the license if it sells taxable goods or trades under a name that is not the owner's full legal name.

The DOR tells you to not begin any business activity until you receive the license, so apply before your first sale.

Washington business license requirements at a glance

This table lists state-level registrations a small Washington business may need, with the fee or rule for each and the agency that handles it. Cities and counties can add their own licenses and taxes on top, covered further down.

How to get a business license in Washington state

The DOR runs the application through its Business Licensing Wizard and the My DOR online account. The DOR says the form itself takes approximately 15–30 minutes to complete.

1. Form your entity first, if you have one

   Washington corporations, partnerships, LLCs and LLPs must file with the Washington Secretary of State before the Business License Application. A Washington LLC's certificate of formation costs $180. Sole proprietors skip this step.

2. Run the Business Licensing Wizard

   The wizard gives you a list of agencies to contact, additional endorsements and helpful tips for your business. Your business may also have additional local, state, or federal licensing requirements that the application does not cover, and the wizard provides information to identify any additional requirements.

3. Apply online in My DOR

   Create a My DOR account and file the Business License Application. Online applications take approximately 10 business days. Endorsements can mean waiting an additional 2-3 weeks for approval.

4. Or apply by mail

   Mail the Business License Application with any extra forms and payment to the address on the form. Mailed applications take up to six weeks.

5. Keep your UBI number and post the license

   The license comes with a Unified Business Identifier (UBI) number, which is a nine-digit number. You need it whenever you file your taxes or make changes to your business. The DOR also says to post the license at each business location.

What a Washington business license costs

The DOR says the application fee varies: it depends on why you are filing. Each application pays one processing fee, which is non-refundable. Trade name and endorsement fees are added on top of it.

Example: a sole proprietor opens a new online candle shop under a shop name that is not her legal name. She pays the $50 fee to open the business and $5 for the trade name, both on one application. If her city requires an endorsement, that endorsement's own fee is added to the same application.

Renewing a Washington business license

You renew the license annually, if your business has a state or city endorsement. The expiration date is determined when you apply and printed on your business license.

You can renew up to two months before the expiration date, and the Business Licensing Service sends a courtesy reminder one month before the license expires. The renewal is due by the expiration date whether or not the reminder arrives. Renewal costs a $5 processing fee plus the fee for each endorsement, and renewals received after the expiration date pay a late penalty of half of the endorsement fee or up to $150.

Taxes you register for with the license

The Business License Application registers your business with the Department of Revenue and other state agencies. Once the license is approved, you file an excise tax return monthly, quarterly, or annually, even if you have no business to report. Your filing frequency is assigned by the department when you apply, and new accounts generally report every quarter.

• Business and occupation (B&O) tax: Washington charges it on total gross income, with no deduction for expenses. The retailing rate is .00471, applied to gross receipts. The Small Business B&O Tax Credit is a credit for businesses below a certain B&O tax liability.
• Retail sales tax: the state rate is 6.5%, and the local rate varies by city and/or county. Retailers collect the rate based on where the customer receives the goods or services, so a shipped order uses the buyer's local rate.
• Reseller permit: it lets retailers and wholesalers buy items for resale without paying sales tax. How long it lasts: generally four years, or two years if certain conditions apply, for example if your business has been open for less than 12 months.
• Employees: if you say you plan to hire, the Department of Labor & Industries and the Employment Security Department send you information about quarterly employee reports.
• Federal EIN: according to the DOR, sole proprietors who are not employers usually do not need an EIN, but all other business types must apply for an EIN, whether they have employees or not.
• Personal property: businesses with personal property file a listing with the county assessor by April 30 of each year.

Washington business license rules for online sellers

The DOR requires a trade name registration for any business name you use that is not your full legal name, so a shop name on a marketplace or your own site needs one when it differs from your full legal name. Doing business under such a name is also one of the license conditions. Registering the trade name does not protect the name from use by others, and it stays registered until the owner asks to cancel it.

If you make all your retail sales through a marketplace facilitator, you do not collect sales tax on those sales if you have proof the facilitator collects it for you. However, you still file and pay B&O and other taxes if you meet a registration threshold.

Sellers based outside Washington register once they meet a reporting threshold in the current or prior year. One of the thresholds is having more than $100,000 in combined gross receipts sourced or attributed to Washington. The DOR says to calculate it using all of your retail sales to Washington customers, including sales made through a facilitator or through your own website. That is the nexus condition in the license table: your business meets the nexus threshold reporting requirements.

City and county licenses in Washington

In the DOR's words, many Washington cities and counties have licensing requirements and taxes on business activities. The state application offers over 400 state and city endorsements, so some city licenses are added to the state license as endorsements rather than applied for separately. Your business may still have additional local, state, or federal licensing requirements that the state form does not cover.

If your business is outside a city's limits but you travel into the city to do business, the DOR says a city Non-Resident Business endorsement is required. Adding it to an existing location has a $0 processing fee, though the city's own endorsement fee can still apply.

Rules vary by city and county, and they can change. This page is general information, not legal or tax advice. Run the Business Licensing Wizard and check with your city and county before you open.

Where Nation fits

Questions about the Washington business license