Here are some steps to get started.
1. Do a business plan.
2. Do a business plan.
3. Do a business plan.
We cannot emphasize enough how important preparing a business plan is to the success of your business venture! But seriously, following are seven items to consider regarding licensing and other requirements.
A business plan does not have to be a formal, lengthy document, but addressing some key issues before you dive in will pay off in the long run. If you will be seeking any sort of financing, you will need to write a solid business plan with realistic financial projections.
Once you have a business plan, and have gotten input from an SBDC Advisor, SCORE Counselor or other business mentor, here are the next steps to formalize your business in Washington State.
1. Determine business structure.
Will you set up as a sole proprietor? LLC? Corporation? What are the differences? I recommend checking with your CPA or accountant to determine the best structure for you and your family or company. Once you determine how your entity will be formed, you should check the zoning (#2), select a business name (#3), read the requirements carefully for each entity and consider how you will operate your business. For example, do you have to file Articles of Incorporation with the state? Do you have an operating agreement? Will you be governed by a corporate board of directors? How will owners or officers be compensated? What else should you consider?
2. Verify zoning.
Do you have a business location? Will you set up a home office? Is the type of business allowed in the location you have selected? These are all questions you should answer before filing your business structure papers with the Secretary of State. In some cities, certain types of businesses are not allowed in residential areas. Typically if you will not be seeing clients or customers at your home, you do not need a special Home Occupation License or Conditional Use Permit, state and city business licenses are sufficient. In some cases, there may be additional permits or requirements (i.e. , retail in residential, daycare, health care, etc.). It's a good idea to check with your local municipality before you get started.
3. Determine and research a business name.
|Does the sign match the |
message for this car lot?
Finally, in determining a business name, consider your key message points and how your name will appeal (or deter) potential customers. If you use initials, look at the acronym. Is it a family or some other emotionally significant name? Will people be able to find, pronounce or remember it? If it is a made up name, will you use a tagline to explain what you do?
Once you've settled on a name, you can register the Trade Name or add a separate DBA (Doing Business As) name at the same time you acquire your state business license (next step).
4. Apply for a Washington State Business License (UBI Number).
Getting your Washington State Business License is easy to do and you can apply online. It is helpful to have your pertinent business information handy and more important to apply once you have your ducks in a row (entity formation, name, trade name), rather than trying to change it after the fact. Taking the time to do it right can save you time and money in the long run.
Example of what not to do: You may apply for a business license and get a UBI number. Then you apply online to register your LLC with the State. Then the Secretary of State issues a new UBI number. Now you've got to try and straighten matters out with the state and possibly the IRS. I talked with the Secretary of State's office and the representative said that this can be a huge mess. If you DO get a UBI number first, contact the SOS office before filing incorporation papers. The same goes for changing business structure. It can be a costly lesson to change from a Corporation to an LLC.
The State has recently partnered with a number of cities to streamline the registration process. Locally you can obtain a license for the cities of Spokane, Spokane Valley and Liberty Lake in conjunction with your State registration. Fees and regulations vary by city.
5. Obtain any specialty licenses or permits.
If you are opening a restaurant, bakery or coffee shop, contact the Regional Health District at the very beginning of the process. The health department has very strict regulations with any sort of food industry and has to approve design plans.
Other industries require specialty licenses as well through Labor and Industries (L&I), Department of Social and Health Services (DSHS) and others. General Contractors, Electricians, Hair Stylists, and day cares are just some examples. The last thing you want to have happen is to invest any amount of money into a business to later learn that the location is not eligible or you do not qualify for the additional license.
6. Set up an account with Department of Revenue and Labor & Industries (if needed).
Once the business license application is approved, it will prompt the Department of Revenue to contact you to establish a vendor account for reporting sales tax and to pay any business and/or sales taxes. If you checked the box on the business license application that you will be hiring employees, L&I will contact you to set up an account for reporting worker's compensation insurance. Not sure how to report? Both agencies offer free workshops for business owners.
7. Contact the Internal Revenue Service for your Federal Tax ID Number.The IRS will issue you an EIN, Employer Identification Number or TIN, Tax Identification Number (social Security Number in some cases). Generally, businesses need an EIN.
8. Get your business checking account.Banks will typically require some sort of proof that you have started a business, i.e., articles of incorporation, state business license, EIN. It is strongly advised that you keep your business and personal funds separate.
There are numerous other things a business owner should take into account before starting a business, but these are just a few of the steps to take in order to get a business established in Washington State.