Key Takeaways

  • Washington doesn’t require formal registration to form a sole proprietorship, but business licensing and trade name registration may be required depending on activities.
  • You must register a trade name with the Department of Revenue if using a name other than your own.
  • Local and state-level licenses, zoning clearances, and permits may be required.
  • A Unified Business Identifier (UBI) is issued upon filing the Master Business Application and is used for tax and regulatory compliance.
  • Sole proprietors with employees need an EIN; others may benefit from obtaining one to open business bank accounts or reduce identity theft risk.
  • Keeping personal and business finances separate is recommended.
  • Sole proprietors are personally liable for business debts and should consider obtaining general liability insurance.

Washington State sole proprietorship registration is not required for a business to legally exist. It is a requirement for a sole proprietor to register before the business can legally operate in the state.

Washington law requires that most businesses register with the Washington Secretary of State. Additional laws deal with other aspects of a business, such as anti-competitive activities and the choice of business name.

About Sole Proprietorships

A sole proprietorship is a common formation for businesses in Washington. It is also the easiest and least expensive among the four entity types. As a sole proprietor, this type of business structure offers flexibility and minimal legal controls.

A sole proprietor is someone who decides to "go it alone" as an individual entrepreneur. This is one person who forms a for-profit business. When running a business alone versus forming a company, you are considered a sole proprietor in the eyes of the law.

A significant disadvantage to forming a sole proprietorship versus forming a company is that the owner is fully liable for all business debts. This means if a lawsuit is filed against the business, the owner (sole proprietor) stands to lose their personal assets. A sole proprietor must also pay self-employment tax due on any profits.

Key Features of Sole Proprietorships in Washington

Sole proprietorships in Washington are automatically formed when an individual begins business activities without forming a formal business entity. This structure allows business owners to report earnings on their personal tax returns and avoid corporate formalities. However, it also exposes them to unlimited personal liability. Sole proprietors are responsible for business debts, taxes, and legal obligations out of personal assets if necessary. Because of this, many choose to purchase liability insurance or use a separate business bank account to protect personal finances.

Naming a Sole Proprietorship in Washington State

In Washington, a sole proprietorship may carry the legal name of the person forming the business. The owner may use a trade name instead.

If you are operating as a sole proprietor and use your legal first and last name for the business, such as a contractor or consultant, you are not required to file. If you choose to operate under a fictitious name (assumed, doing business as) you must file with the State of Washington Business Licensing Service.

A trade name belongs to the individual who used it first as part of their business. This gives that person the right (ownership) to use the name.

A business name that's similar to or the same as another business operating in Washington can't be used. To ensure this doesn't happen, verify name availability at the department of licensing website. Also, check the Secretary of State website for corporations or limited liability companies that may be using a similar name for the business.

To protect your registered business name, it's recommended that you also register for a trademark. This is handled at the U.S. Patent & Trademark Office website.

Registering a Trade Name and Checking Name Availability

When choosing a business name, it's important to ensure it’s unique and not already in use by another registered business. Conduct name searches using:

  • Washington Secretary of State’s corporate and business entity search
  • U.S. Patent and Trademark Office’s Trademark Electronic Search System (TESS)

Once a trade name is selected, it must be registered through the Department of Revenue (DOR) via the Master Business Application. The filing includes a $5 registration fee and a $10 processing fee (as of 2023). Registering a trade name is mandatory if the name differs from the owner's full legal name.

Things to Know for Sole Proprietorship Registration

A business license isn't needed if all of these exceptions are met:

  • No retail sales tax is collected.
  • The businesses yearly gross is less than $12,000.
  • The company isn't required to pay any other taxes, such as utility or use taxes.
  • A regulated or renewable license with the Master License Service of Washington isn't required.
  • There are no employees or plans to have employees in 90 days.
  • The business is under your legal name, not a "doing business as" name.

Businesses operating as a general partnership or sole proprietorship will file the Washington Master Business Application. Businesses that need a specialty license must submit the master business application along with supporting documents to the Master License Service. Specialty licenses include areas such as liquor sales and vehicle dealers.

The Washington Master Business Application allows someone to apply for more than one state license as well as permits and some city licenses. The Business License Application is used to register a trade name. It also allows the creation of a state employment account, which is used for employees working for your business. It isn't necessary to set up an account for employees unless there will be workers within the next 90 days.

State and Local Licensing Requirements

Many sole proprietors in Washington must obtain state licenses and local permits. Depending on your business activity, you may need:

  • A state business license via the DOR
  • Specialty licenses for regulated industries (e.g., childcare, construction, liquor sales)
  • City or county business licenses (especially in cities like Seattle, Spokane, or Tacoma)
  • Zoning and building permits if operating from a physical location

The Business Licensing Wizard on the DOR site can guide you through license requirements. Some cities have their own licensing portals—check with your local city hall or county government.

Information for Registering a Sole Proprietorship

File a master business application online at the Washington Business Licensing Service, by mail, or in person. Include the current filing fee and the application fee for a trade name, if applicable.

  • Provide the purpose of the sole proprietorship.
  • Indicate that you're registering a trade name.
  • Check the applicable box indicating sole proprietorship.
  • List the owner's name and address, the location of the business, and when it opened.
  • List the type of ownership.
  • Provide your Social Security Number.
  • Provide your Federal Employer Identification Number, which the IRS issues.

After Registration: Banking, Insurance, and Recordkeeping

After establishing your sole proprietorship, consider taking these steps:

  • Open a business bank account to separate personal and business funds. Most banks require an EIN and trade name registration.
  • Purchase business insurance, such as general liability, professional liability, or property insurance, to protect against unexpected claims.
  • Track income and expenses meticulously for tax filing and deduction purposes.
  • Renew licenses annually and update business information with the DOR as needed.

Maintaining clear separation between your personal and business finances is especially important in a sole proprietorship, where the owner's assets are not shielded from liability.

EIN, UBI Number, and Tax Responsibilities

Sole proprietors who plan to hire employees or open a business bank account will need an Employer Identification Number (EIN) from the IRS. You can apply for an EIN online for free. Even without employees, having an EIN can be useful for safeguarding your Social Security number.

Upon registering your business through the Master Business Application, you will be assigned a Unified Business Identifier (UBI) number. This is a unique number used by Washington agencies to identify your business for tax and licensing purposes.

Washington also imposes unique tax obligations on sole proprietors, including:

  • Business & Occupation (B&O) tax based on gross income
  • Sales and use tax if selling tangible goods
  • Employment taxes if hiring staff

Ensure you understand your tax responsibilities and file appropriate returns with the DOR to avoid penalties.

Frequently Asked Questions

1. Do I need to register my sole proprietorship with the state of Washington? Not formally, but you must file a business license application if your business meets certain criteria, such as hiring employees or collecting sales tax.

2. What is a Unified Business Identifier (UBI) number? A UBI is a unique number issued by Washington's DOR when you apply for a business license. It's used for state tax and regulatory purposes.

3. Do I need a business license in Washington? Yes, unless you meet specific exemptions. Most businesses must apply for a Washington business license through the DOR.

4. Can I use my Social Security number instead of an EIN? Yes, if you don’t have employees. However, getting an EIN is advisable for banking and privacy reasons.

5. Are there any ongoing requirements for sole proprietors in WA? Yes, including renewing your business license annually and staying compliant with tax and licensing regulations at both state and local levels.

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