Key Takeaways

  • Doing business in Washington includes selling goods or services, maintaining an office, or hiring representatives in the state.
  • Businesses operating without registration risk back taxes, penalties, and loss of the right to sue in Washington courts.
  • IT companies in Washington State must register properly if they maintain physical or economic presence.
  • Certain activities—like one-off transactions, banking, or interstate commerce—do not constitute doing business.
  • Registering a foreign entity requires filing with the Washington Secretary of State and appointing a registered agent.
  • Washington is home to top IT and software companies, making compliance important for out-of-state businesses entering the market.

What constitutes doing business in Washington state? Selling goods or services, having an office or a representative in the state, and having a store or warehouse in the state may constitute doing business in Washington. Situations in which a business may not be construed as a business in the state include making one-off transactions, defending or filing a lawsuit in the state, operating certain delivery and installation services, running a local branch of a foreign academic institution, and doing business through independent contractors.

Why It Is Important to Know If You Are Doing Business in Washington

Many business owners have found themselves doing business in the state without ever knowing it. Doing business in Washington state without legal authorization could prove a costly mistake. Some possible consequences of doing business in the state without registration are:

  • Your business stands to pay tax arrears and fines if found doing business in the state without paying taxes. Washington state requires all businesses that conduct business in Washington to pay sales tax and B&O tax. Businesses that meet the definition of "doing business" in the state qualify for these taxes regardless of whether they are registered in the state.
  • A business that operates in Washington but is not registered cannot file a lawsuit in the state.
  • A business discovered to be doing business illegally in the state could be forced to pay outstanding filing fees for the time it has operated illegally in Washington.

Economic Nexus and Tax Obligations

Washington applies a broad “economic nexus” standard, meaning that a company may be considered to be doing business in the state even without a physical office. For example, an out-of-state IT company Washington state clients hire for software development or managed services may trigger tax obligations if revenues exceed certain thresholds. Businesses may owe Business & Occupation (B&O) tax and sales tax once they meet Washington’s economic nexus criteria, regardless of physical presence.

This is especially relevant for IT service providers and software developers who frequently operate remotely but generate significant revenue from Washington clients. Failing to comply can lead to back taxes, penalties, and interest assessments.

What Constitutes Doing Business in Washington State?

A business can be said to be doing business in Washington if it owns a warehouse in Washington or has a store in the state. Also, businesses that have sales representatives in the state are said to be doing business in Washington State.

Businesses can pursue certain business-related activities without worrying about being judged as doing business in the state. Activities that do not constitute doing business in Washington state include:

  • When a lawsuit is filed against your business in Washington, defending your business against the lawsuit does not constitute doing business.
  • Doing internal business activities, such as holding board or member meetings, does not constitute doing business.
  • Having a bank account in Washington state does not on its own constitute doing business in Washington.
  • In some cases, businesses that have offices, agents, and representatives in the state who are handling the companies' own securities are not automatically assumed to be being business in the state.
  • A business that is selling its goods or services through independent contractors will not be presumed to be doing business in the state.
  • Some businesses involved in delivery and installations are, in some circumstances, excused from the definition of doing business in the state.
  • Collecting debts is not necessarily conducting business.
  • Making a one-off or isolated business transaction that is completed within 30 days and is not repeated does not meet the requirement for doing business.
  • Getting involved in interstate commerce is not always interpreted as doing business in Washington.
  • Managing a branch of a foreign academic Institution that offers degrees does not constitute doing business in Washington.

IT Companies and Common Business Activities

An IT company Washington state residents contract with may be considered to be doing business if it:

  • Maintains an office, co-working space, or data center in Washington.
  • Employs on-site technicians, consultants, or sales representatives.
  • Offers managed IT services, cybersecurity solutions, or software development tailored for local businesses.
  • Enters into recurring service agreements or contracts with Washington clients, even if services are delivered remotely.

Washington courts and tax authorities take a broad view of “doing business.” For IT and software companies, this can include everything from cloud hosting to on-site network installation. By contrast, isolated transactions or using independent contractors for short-term projects are less likely to establish nexus.

Examples of Major IT Companies in Washington

Washington is home to some of the largest and most innovative IT companies. Microsoft, Amazon Web Services (AWS), and Tableau all maintain headquarters or significant operations in the state. In addition, dozens of mid-sized software development firms and managed service providers serve Washington’s robust technology ecosystem.

This concentration of technology companies sets a high standard for compliance and regulation. New entrants—whether large or small—must ensure they properly register to avoid enforcement actions. Out-of-state IT service providers seeking to compete in this market should be aware of licensing, tax, and regulatory obligations.

How to Register a Foreign Business in Washington

In Washington, to register a business that was formed in another state, the business owners must file a Foreign Liability Company Registration form. This document is submitted to the Secretary of State of Washington state. A $180 fee is required if the filing is done by postal mail or $200 if it is submitted online. The form requires you to share basic details about your company, including the following:

  • The name of your company.
  • The Doing Business As (DBA) name of the company, if any.
  • The address of the business.
  • The state where the business was formed.
  • The name and address of the business' registered agent for service of process in Washington.
  • The names and addresses of the business members and managers.
  • The certificate of existence of the business from the state where the business was formed.

You can find details about how to form an LLC and an S corporation in Washington in detailed articles from UpCounsel.

Compliance Tips for IT Companies Entering Washington

For IT companies expanding into Washington, consider the following best practices:

  1. Confirm Nexus: Review your revenue levels and customer base to determine whether you meet Washington’s economic nexus thresholds.
  2. Register Promptly: File the Foreign Registration form with the Secretary of State before commencing regular business.
  3. Appoint a Registered Agent: Choose a reliable in-state agent to handle service of process and state correspondence.
  4. Understand Local Taxes: Be prepared to pay B&O tax on gross receipts and collect sales tax where applicable.
  5. Industry-Specific Licenses: Some IT services, such as telecommunications or data hosting, may require additional licensing.

Proactive compliance will help IT companies avoid costly legal and financial complications as they expand in Washington’s competitive market.

Frequently Asked Questions

  1. Does an IT company without a physical office still need to register in Washington?
    Yes. If the company meets Washington’s economic nexus thresholds through sales or services, registration and tax obligations apply.
  2. What taxes apply to an IT company in Washington state?
    Businesses may owe Business & Occupation (B&O) tax on gross receipts and must collect sales tax when selling taxable goods or services.
  3. Do one-time IT projects in Washington require registration?
    Not always. Isolated transactions completed within 30 days generally do not establish “doing business.”
  4. Which IT companies are headquartered in Washington?
    Major companies include Microsoft, Amazon Web Services (AWS), and Tableau, alongside many mid-sized IT service providers.
  5. How does an IT company register to do business in Washington?
    File a Foreign Registration with the Secretary of State, pay the required fee, and designate a registered agent for compliance.

If you need help to find out if your business it company Washington state, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.