How to Start an LLC in Washington State: Steps and B&O Tax

How do I start an LLC in Washington State?

A Washington LLC takes three things in this order: a Certificate of Formation with the Secretary of State, a business license from the Department of Revenue (DOR), and then the excise tax returns DOR assigns. Forming the LLC does not license it: DOR says an LLC files with the Secretary of State first and then files its own Business License Application (DOR).

Fees come from the Secretary of State, WAC 434-112-075, DOR and the IRS. Whether the LLC needs an EIN is covered in EIN for a single-member LLC.

A Washington LLC stops being simple when it has two or more owners, holds a rental, wants S corporation tax, will hire, sells taxable goods or services or sells into other states, has an owner moving into or out of Washington, or did business before getting its license. The first B&O and sales tax returns are the first real decisions: the classification, the credit and the filing frequency set what the LLC pays. Each is covered below or linked at the end.

Gather before you file:

• An LLC name that includes "LLC" or one of the other required endings.
• A registered agent's Washington street address and email.
• The principal office street address and email.
• Names and addresses of the people forming the LLC and of its governors (members or managers).
• The nature of the business, and expected gross income by activity (services, retail sales, wholesale).

How to start an LLC in Washington State online, and what does it cost?

File the Certificate of Formation online through the Secretary of State's Corporations and Charities Filing System, for $180 plus the $20 online processing fee. Log in, choose "Create or Register a Business", then "WA Limited Liability Company" (Secretary of State; WAC 434-112-075). Expedited processing costs extra.

The online form asks for:

• Name: must include "Limited Liability Company", "Limited Liability Co.", "L.L.C." or "LLC", must be distinct from names already on record, and may not use restricted words such as "bank" or "trust".
• Registered agent: required. A commercial agent, or a noncommercial agent (an individual or business that agrees to serve), with a physical Washington street address (no post office boxes or private mailboxes) and an email address. See registered agent.
• Principal office: where the LLC keeps its records. It must be a physical address, but it does not need to be in Washington.
• Executors: the state's word for the people who sign and file the Certificate of Formation.
• Governors (members or managers) and nature of business: required when the initial report is filed with the formation.
• Effective date: the filing date, or a future date up to 90 days out.

When the filing is accepted, the LLC gets a nine-digit Unified Business Identifier (UBI), and the confirmation letter and documents appear in the online account. The Secretary of State does not record operating agreements, but its LLC resource page says an LLC must have one. A federal BOI report is not required: FinCEN exempts US companies (FinCEN; see BOI report).

What is the Washington LLC initial report, and when is it due?

A new Washington LLC must file an initial report within 120 days after its Certificate of Formation takes effect. The report records the principal office and the LLC's governors (RCW 23.95.255).

Fees are in WAC 434-112-085. Checking the defer box is an acknowledgment that the report is due within 120 days and needs an extra fee (Secretary of State). Filing both together avoids that fee and a second deadline.

Do I need a Washington business license for my LLC?

An LLC needs one when any of these applies (DOR):

• The business needs city, county or state endorsements.
• It does business under a name other than its own legal name.
• It plans to hire employees within the next 90 days.
• It sells a product or service that requires collecting sales tax.
• Its gross income is $12,000 per year or more.
• It must pay taxes or fees to DOR.
• It buys or processes specialty wood products, or it meets DOR's nexus reporting thresholds.

File the Business License Application after the Secretary of State accepts the LLC. Opening a new business costs $50, plus a fee for each endorsement (DOR fees). Online applications take about 10 business days; endorsements can add two to three weeks, and mailed applications up to six weeks (DOR FAQ).

DOR says not to begin business activity until the license arrives, and to post it at each location (DOR next steps). A license that carries a state or city endorsement renews every year (DOR FAQ).

The trap is treating the LLC filing as the license. A business that does taxable work without registering owes a penalty of 5% of the tax due for the unregistered period, unless it registers before DOR contacts it (RCW 82.32.090).

What is Washington B&O tax, and will my LLC owe it?

Business and occupation (B&O) tax is a tax on gross receipts: a rate times the gross income of each activity, with no deduction for labor, materials or other costs. It is paid by the business, not collected from customers (DOR). An LLC can owe B&O tax in a year it loses money.

The rate depends on the activity. There are more than 50 classifications, and a business with several activities reports under each one (DOR).

Rates are from DOR's classification table and its service rate notice; prior-year service income of $1,000,000 or more, counting affiliated businesses, moves to a higher rate.

Rent from leasing real estate to a tenant, such as an apartment or a house, is exempt from B&O tax; lodging for less than 30 continuous days is taxed as retailing (WAC 458-20-118).

The small business B&O credit can reduce a small bill or wipe it out. The maximum credit is $160 for each month in the reporting period if at least half of the taxable income is service and other activities (or a few other listed classifications), and $55 a month otherwise. When the tax is above the maximum, the credit is twice the maximum minus the tax, so it reaches zero when the tax is twice the maximum (RCW 82.04.4451). Filing electronically calculates it from DOR's tables (DOR credits).

Many cities add their own B&O tax, which DOR does not collect (DOR); Seattle, for example, has its own license and B&O return (City of Seattle). For a business based in another state, see gross receipts taxes in other states.

How often does a Washington LLC file B&O returns?

DOR assigns a monthly, quarterly or annual filing frequency from the estimated yearly tax on the combined excise tax return, sales tax included, and states it in the welcome letter. The return is filed online, and it is due even for a period with no business (DOR; WAC 458-20-22801; DOR next steps).

A due date on a weekend or holiday moves to the next business day. DOR's page also has a table by estimated gross income, which can point to a different frequency; WAC 458-20-22801 uses the tax, and the welcome letter says which one DOR assigned. To change the frequency, call DOR.

An LLC may qualify for active non-reporting status, with no returns to file, if it does not collect sales tax, its gross income from all B&O classifications is under $125,000 a year, and it owes no other tax or fee to DOR (DOR).

Late payment costs 9% of the tax, rising to 19% if unpaid by the end of the next month and 29% after the second month (RCW 82.32.090).

Does my Washington LLC collect sales tax?

A Washington LLC collects sales tax when it sells taxable goods or retail services to the end user: physical goods, many digital products, and services such as installing, repairing, cleaning, construction and landscaping (DOR).

Since October 1, 2025, some business services are retail sales too: advertising services, information technology services (including IT consulting), custom website development, live presentations, investigation and security services, temporary staffing, and custom software. Each has exclusions listed by DOR, so check the service before the first invoice. The same law ended the old exclusion for digital automated services done mainly by human effort, so a service delivered through software can be taxable even when people do most of the work. DOR says parts of the law are being challenged in court, and sellers must still collect under its current guidance. A seller that missed tax on these services can apply to DOR's penalty relief program by September 30, 2027 for periods through December 31, 2026; it waives penalties only, and the tax and interest are still due (DOR).

The rate is the state's 6.5% plus the local rate where the customer receives the goods or services. Sales tax collected is held in trust for the state and paid with the excise tax return. A business buying goods to resell gives the seller a reseller permit; it pays sales or use tax on what it buys for its own use (DOR). If the LLC is dissolved, abandoned or insolvent with collected sales tax unpaid, DOR can collect that tax, with penalties and interest, from its members and managers personally: whoever ran the business or its finances, regardless of fault, and any other member or manager whose failure to pay was willful, for the periods each was responsible (RCW 82.32.145). For customers in other states, see when you must collect sales tax.

LLC annual report in Washington State: when is it due, and what if it is late?

A Washington LLC files an annual report every year by the last day of the month it was formed. It may be filed up to 180 days early, and filing early does not move the due date (Secretary of State; WAC 434-112-060).

The postmark is not the date received (Secretary of State). The state sends a reminder by mail and email 60 days before the due date, but a missing reminder does not excuse the report. A late report puts the LLC in delinquent status (Secretary of State). If it is still missing 120 days after the due date, the Secretary of State may serve a notice of administrative dissolution, and an LLC that does not cure it within 60 days of that notice is dissolved (RCW 23.95.605; RCW 23.95.610).

A dissolved LLC can be reinstated within five years by paying a $140 penalty plus every missed annual report fee. After five years its UBI can no longer be used, and a new LLC must be formed (Secretary of State). See reinstating your company.

The annual report must also disclose any transfer of a controlling interest in the LLC and any interest it holds in real property (WAC 434-112-060).

LLC or S corp in Washington State: what changes?

An S corporation election does not change the LLC's Washington taxes or reports: it still pays B&O tax on gross receipts, collects any sales tax, and files the same Secretary of State and DOR reports; DOR says B&O is paid by the business that does business in Washington (DOR). With no state income tax to change, the choice turns on federal tax and the cost of running payroll.

Federally, a one-member LLC is disregarded and an LLC with two or more members is a partnership, unless it elects corporate tax (IRS). Washington is a community property state: spouses who own the LLC entirely as community property may report it either as a disregarded entity or as a partnership (Rev. Proc. 2002-69). An S corporation pays working owners through payroll, and payroll brings Washington employer accounts: when the Business License Application says the business will hire, the Department of Labor and Industries and the Employment Security Department send quarterly report information (DOR FAQ). For the election's timing and salary rules, see S corporation from day one.

No income tax in Washington: what does an LLC owner still pay?

Washington has no individual income tax today, so an LLC's profit is taxed federally. A one-member LLC's profit goes on the owner's return, with self-employment tax of 15.3% on net earnings; a multi-member LLC generally files a partnership return and each member is taxed on a share (IRS; IRS).

In Washington the business pays B&O tax and passes on sales tax, and owners face two more state taxes:

• A capital gains tax on some individuals' long-term gains (DOR).
• A new income tax from January 1, 2028 on adjusted gross income above $1,000,000, with the first returns due in April 2029 (DOR).

A business that uses equipment or other personal property also files a personal property listing with the county assessor by April 30 each year (DOR next steps). The full list is in states with no income tax: what an owner still pays.

What does a Washington LLC cost in year one?

The state's fixed charges for year one are the formation fee, the online processing fee and the business license fee; everything else depends on the city, the agent and the income.

Sources are linked in each section above. To compare with other states, see LLC cost by state.

Example

These examples are illustrative; all figures are in US dollars.

Seattle consultant, single-member LLC

An owner forms an LLC online in March for $180 plus the $20 processing fee, files the initial report with it, then pays $50 for the state business license: $250 in state fees. Seattle's own business license is a separate application with its own fee. The LLC earns $150,000 of management consulting fees. Assume the consulting is advice the owner gives directly and is not one of the services DOR lists as retail sales; on that assumption the LLC collects no sales tax.

B&O at the 1.5% service rate is $2,250 for the year, above the $1,050 annual limit; say DOR assigns quarterly filing. A $37,500 quarter owes $562.50 before the credit. The maximum quarterly credit is $480 (3 months times $160); the tax is above it, so the credit is $960 minus $562.50, or $397.50. That leaves about $165 a quarter, about $660 for the year; monthly or annual filing gives the same yearly total (DOR's tables round in $5 steps). At 1.5%, the full credit covers the tax on up to about $10,667 of service income a month (about $128,000 a year) and is gone at about $21,333 a month. Seattle's B&O tax applies only above $2 million of taxable revenue, so the LLC owes none, but it still files Seattle's annual return reporting its gross revenue. The profit is taxed on the owner's federal return with self-employment tax. The $70 annual report is due by March 31 each year.

Spokane online shop, $40,000 of retail sales

An LLC sells $40,000 of goods, all shipped to Washington customers. Retailing B&O at 0.471% is $188.40 for the year. The sales tax it collects (at least $2,600 at the 6.5% state rate alone) puts its yearly excise tax above $1,050; say DOR assigns quarterly filing. Under the $55-a-month credit, a quarterly filer's maximum credit is $165, well above about $47 of tax a quarter, so the credit covers the B&O tax in full, as it would at any frequency.

The shop still files every return, because it collects sales tax at each customer's local rate and pays it over; collecting sales tax rules out active non-reporting status. Its profit is taxed federally only.

Annual report filed late

An LLC formed in June has a June 30 due date every year. The owner files on July 3, so the report costs $95: the $70 fee plus the $25 delinquency fee. Had it gone unfiled until the LLC was administratively dissolved, reinstatement within five years would cost $140 plus $70 for each missed report.

Different for you?

• Your first B&O and sales tax returns are coming due: the classification, the credit and the filing frequency decide what you pay. See bookkeeping and after you form your company.
• You want S corporation tax: see S corporation from day one and corporate tax.
• You did business before getting the license: registering before DOR contacts you avoids the unregistered penalty, and DOR's voluntary disclosure program can waive up to 39% of penalties; interest is still due. See bookkeeping for catch-up books and returns.
• You and your spouse own the LLC together: see spouse and family LLCs.
• The LLC will hold a rental property: see rental property in an LLC and bookkeeping.
• You are hiring, or paying yourself through payroll: see setting up payroll and bookkeeping.
• An owner is moving into or out of Washington: see moving your company to another state, registering in another state and individual tax.
• An owner is on a visa or has no SSN: see starting an LLC on a visa and EIN without an SSN.
• You sell to customers in other states: see when you must collect sales tax.
• You are a licensed professional: see professional LLC or professional corporation.
• Your LLC missed a report or was dissolved: see reinstating your company.
• You want the formation, license and first filings set up together: see business formation.