June 21, 2017
Congratulations! You’ve decided to start a business – now it's time to get licensed!
This is a four-step process in Washington State: 1 - Register with the IRS, 2 - Register with the Secretary of State, 3 - Register with the Department of Revenue, 4- Set up your business bank account.
Remember, it can take up to 30 days from the time you file your paperwork to receive some of your information, so plan your time wisely!
Also, make sure to stay organized and document each step of the process - you're going to need that paperwork later! Ready?
Cost: It's free to register with the IRS online. Be wary of sites charging for this service, and make sure you're on a secured .gov site.
The Process: After you fill out the required information, the IRS will assign you an EIN (Employer Identification Number), which you need if you are a Partnership, multiple-member LLC, Corporation, or if you plan to hire employees.
If you're a sole proprietor then you can choose to skip this step, however, we still recommend that you get an EIN so that you don’t have to hand out your social security number to your vendors!
What You’ll Get: An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify your business entity and to report payroll taxes.
This is where your Business plan come in handy! If you’re setting up an LLC, Partnership, Corporation, or Non-Profit it's time to tell the Secretary of State what kind of business you're going to be (note: Sole Proprietors should skip this step).
Cost: $200 to file online / $180 to file by Paper.
The Process: Tell the secretary of state what kind of business you're opening, submit your articles of incorporation or organization, and register your trade name.
Cost: $19 + city license (each city is different).
The Process: Complete the online application – beware! If you plan to hire employees within the next 12 months, you must check the “hire employees” box. This will automatically setup your payroll tax accounts with Employment Security and Department of Labor & Industries (note: If you skip this step, then you’ll have to re-submit this application and re-pay the $19 fee in order to get your payroll tax accounts and tax rates!).
Here are some questions on the application that you’ll need to be prepared to answer:
- When did your business open?
- Is your business inside city limits? Note: If you will be working inside city limits, then you need to register for a city license, which can be done on this same application. If you are in the county then you do not need an additional license.
- List all owners and spouses name, home address, SSN, DOB, % Ownership).
- What is your estimated gross annual income in Washington?
- Will you have employees? – Will any be under age 18?
- Do you want workers’ compensation for owners? Note: Check with your insurance provider to see what you are covered for and assess your risk level!
- If you are a profit corporation, do you want unemployment insurance coverage for Corporate Officers?
What you'll get: Your WA State Business License, Unified Business Identification (UBI) Number, City License (if applicable), and If you have employees: Workers’ Compensation account number & tax rates, plus your State Unemployment account number & tax rates.
4. Setup Business Bank Account
Once you have your EIN number, you can setup your business bank account. This is an important step for accurate record-keeping. We recommend that you choose a different bank than where you bank personally – and that you ask these questions:
- What are the monthly fees?
- Do they have Business Bill Pay?
- Do they offer small business lending / lines of credit?
- Can you setup and manage multiple online users on the account?
If you plan to use a credit card for business, you’ll also want to apply for a Business Credit Card (again, separate from any personal cards).
Finished with these 4 steps? Congratulations!
You're one step closer to opening your small business. Now you're ready to setup your bookkeeping system.