Is Washington State a Good Place to Start a Business?
Date of Post
Apr 19, 2022
Read Time
4 mins
Date of Post
Maricela Olivo

Washington state is a great place to start and grow it into a thriving business. The cost of doing business is cheaper than in other states. The cost of living is also cheaper than in other major cities. Lastly, having access to more capital than most other states means that you can start a business with a lower capital requirement. There are, however, many things that you will need to keep an eye on with your business.

Therefore, it will be important for you to understand the cost of starting a business in Washington and the benefits of doing so.

How much are small business taxes in Washington State?

According to the U.S. Census Bureau, the average effective tax rate on businesses in Washington is 2.76%. This is lower than the national average of 3.53%. The taxes in Washington are imposed at three levels – federal, state, and local. The primary source of tax revenue is the state-level. The state level taxes include the corporation income tax, the business and occupation (B & O) tax, and the gross receipts tax. The B & O tax rate and gross receipts tax rate vary between cities and counties. The corporation income tax rate is 6.5 percent.

What taxes do businesses pay in Washington?

There is no personal or business income tax in Washington State. After your first $35,000 in gross receipts, Washington imposes a 1.8% gross income tax on your earnings. A 6.5% sales tax is levied by the state of Washington.

How much does it cost to start a business in Washington?

Washington’s LLCs have 120 days from incorporating or forming to file an initial report with the Secretary of State which comes at the cost of $10. The cost of then forming an LLC in Washington is $180 ($200 online).

Every Washington and foreign Corporation permitted to do business within the state, also has within 120 days after establishment to file an Initial Report with the Secretary of State at a filing fee of $60.

What is considered a small business in Washington State?

There are many ways to think about what a small business is, but one of the most common and straightforward ways is by the number of employees. The federal Small Business Administration defines a “small business” as one with fewer than 500 employees; 99.9% of businesses in America fit this definition. Industry-specific tables offered by SBA provide size standards depending on the business.

What attracts businesses to Washington State?

Starting a business in Washington is an excellent choice due to its high rankings for health, education and quality of life. Washington boasts over 250,000 registered businesses, ranging from one-person startups to huge household names such as Amazon and Microsoft.

Having companies such as Amazon and Microsoft as well as Google and Facebook all being hosted within the Puget Sound region of Washington has caused the economy to boom and prosper. Washington’s tech industry includes approximately 14,000 businesses adding more than $75.2 billion to the state economy every year, representing 17.4% of the state’s economy. But this growth not only benefits those in the tech industry, but also entrepreneurs who indirectly benefit from it. As profits continue to rise, startups open and more people flood into Washington seeking jobs. Entrepreneurs in other industries are seeing their customer bases grow and their clientele’s disposable income increase.

Alongside this, the process for registering your business with the state is simple and straightforward- you need only provide your company name, address, and industry, along with the other information required by the form.

Is Washington DC business-friendly?

Washington DC has several advantages when it comes to starting a small business. One of the most important advantages is that there are many incubators and accelerators which offer entrepreneurs the opportunity to access experienced mentorship and the ability to refine ideas. This also means entrepreneurs are able to pitch products and ideas to potential investors. Washington also offers co-working spaces (collaborative offices), spaces where you can meet with other business owners and receive advice. They are free to use, so you can start using them the minute that you move to Washington DC. This culture encourages support for local, independent businesses, therefore helping small business owners to succeed.

How many small businesses are in Washington?

According to the U.S. Census Bureau, there are approximately 630,819 small businesses in Washington making up 99.5% of businesses and ranking Washington 15th among all the states. These small businesses employ 1.4 million equalling a total employment share of 50.7% .

The states with the most number of small businesses are:

California – 4.2 Million

– Texas – 3 Million

– Florida – 2.8 Million

– New York – 2.3 Million

– Illinois – 1.2 Million


Washington may be known as the Evergreen State, but it’s also a state that’s ready to welcome new businesses with open arms. From its business-friendly tax climate to its tech talent, to its strong network of partnerships, Washington has everything businesses are looking for.