Registering Your Startup to Do Business in Washington State

Forming your business entity in Delaware—specifically, a corporation—gives you a lot of flexibility, but you may still need to follow local laws depending on what state you operate in.

Specifically, if you do business in Washington State, you need to register with the State. We’ll walk through the process and simplify it. But first, how can you tell whether you’re legally doing business in Washington?

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When to register as doing business in Washington State

Delaware C corps—and all other corporations formed outside of Washington State—are referred to as “foreign” corporations by the State.

You’re most likely doing business in Washington State if you are:

Hiring employees to work in Washington
Purchasing or selling goods or services in Washington
Operating a web site for the purpose of conducting business

When to register to collect sales tax in Washington State

Every state has rules about when a company is required to pay sales tax. These are called sales tax nexus rules.

You can think of the nexus as a special version of that state’s border; if you perform certain business activities within that border, you fall into the state’s sales tax nexus, and you’re required to register for and collect state sales tax.

Typically, these actions take the form of buying and selling goods and services.

In Washington State, the sales tax nexus rules only apply to sellers who sell physical goods or services to Washington residents. Selling software, for example, would not trigger sales tax nexus rules.

Until 2018, selling or buying non-physical goods—like subscriptions to streaming services, SaaS memberships, etc.—did not, generally speaking, qualify you for sales tax nexus. After an important court ruling in 2018, that changed. Now, if you buy or sell non-physical goods or services in a state, you may fall within its sales tax nexus.

Washington State Sales Tax Nexus (physical goods and property)

You fall within Washington State’s sales tax nexus through physical presence if you:

Have real or tangible personal property in the state
Rent or lease tangible personal property in Washington
Install or assemble goods in Washington, either by employees or other representatives

You can learn more about physical presence for sales tax purposes through the State’s website.

Washington State sales tax nexus (non-physical goods and property)

The new state sales tax laws applying to non-physical (ie. internet) sales allow you to qualify for sales tax nexus even without physical presence or goods. In Washington State, you need to cross a certain threshold to qualify.

A business needs to collect and submit applicable sales tax if they have more than $100,000 in combined gross receipts sourced or attributed to Washington.

If you want to take a deep dive, you can check out the official notice from the State.

As usual, this isn’t legal advice—just a guide. If you’re not 100% clear on whether you fall within Washington’s sales tax nexus, it’s best to confer with your legal counsel and/or an accountant that has expertise in Washington's legal code and tax regulations.

How to register to do business in Washington State

To become a “qualified foreign business” in Washington State, you’ll need to do the following:

Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be
Fill out an application. You’ll need to fill out a Foreign Registration Statement with the Washington Secretary of State and include a Delaware Certificate of Good Standing
Pay the fee. Now you pay the Washington Secretary of State office a $180 filing fee
Submit your Foreign Registration Statement
Wait. Processing typically takes two to four weeks

If you use Capbase to incorporate your company, you can choose to have Capbase file a Foreign Registration Statement on your behalf.

Compliance as a Qualified Foreign Business in Washington State

To stay in compliance and continue legally doing business in Washington State, you need to meet three requirements: maintaining a registered agent, filing annual reports, and renewing your business license. On top of that, you must pay a Washington business and occupation (B&O) tax.

Registered agent in Washington State

Your registered agent in Washington State is your point of contact with local authorities. If you don’t have a physical address for your company in Washington, you must hire a registered agent to receive state notices on your behalf.

Foreign corporations are required to have a registered office in Washington. The office cannot be a P.O. box; it must be a physical address of your registered agent or a licensed registered agent service.

Your registered agent will forward any important information, such as business mail, to you. There are a number of firms that contract out registered agents. They typically cost $50 – $100 per year.

Annual reporting in Washington State

Every year, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:

The legal name of your business

The name and address of your registered agent

The names and addresses of board members, managers, and officers

The filing fee for the annual report is $60 for both online and paper filings. An expedited service is available for paper filings for an additional $50.

Business License in Washington State

Washington State’s Department of Revenue says a business must register for a business license if it meets any of the following requirements:

It is required to pay taxes or fees to the Department of Revenue
It plans to hire employees in the State within 90 days
It is doing business using a name other than your full name legal name

If you want to take a deep dive, you can check out the official notice from the State.

Paying Washington State’s Business and Occupation Tax

Unlike most other states, Washington State does not have a corporate income or franchise tax. However, there is a business and occupation (B&O) tax that you must file annually. This tax is measured based on the value of products, gross proceeds of sale, or gross income of your business.

For more information on paying your annual taxes, please see the Washington Department of Revenue.

How to register and collect sales tax in Washington State

After you register for your business license, Washington State’s Department of Revenue will send you an information packet. This packet will have your Account ID and a filing frequency for your taxes, including your sales tax.

You can file and pay your taxes through the Department of Revenue’s online portal.

Hiring and paying employees in Washington State

To hire Washington State employees, you must file your business license no sooner than 90 days before you plan to hire. By submitting your application, your business will be registered for worker’s compensation and unemployment insurance. You will also have to report your new hires to Washington’s Department of Social and Health Services within 20 days of hiring.

Your payroll provider should be able to take care of paycheck withholdings, but it’s up to you to register as an employer with the State and set up an online employer account.

For a comprehensive guide to your responsibilities as an employer, Washington provides the following information.

The easiest way to register your business in Washington State

To register your business in Washington State, you’ve got to keep track of a lot of moving parts. Failing to file the right forms, provide the right information, or stay on top of compliance laws can lead to serious headaches.

Capbase makes it easy. When you incorporate with Capbase, we generate the information you need to register to do business in Washington State and keep you up to date on any required filings. Try Capbase now.