By Jake Lawson, LLC Formation Strategist
Let me drop some hard truth on you: Yes, you can form a general partnership in Washington, and yes, it requires zero state filing paperwork. But after 15 years helping over 1,200 entrepreneurs navigate business formation, I’m going to tell you something most guides won’t—Washington general partnerships are one of the worst business decisions you can make.
Here’s the brutal reality: Washington actually makes partnerships more complicated and expensive than most states. You still need a state business license ($90), you still need all the same paperwork as an LLC, and you still get zero liability protection. It’s like buying a luxury car with no brakes—fancy setup, disastrous ending.
And in Washington’s litigious business environment, with tech companies, manufacturing, and service industries everywhere, the liability risks are enormous.
What Is a Washington General Partnership? (The Unfiltered Reality)
A general partnership is a business structure where two or more people agree to run a business together and share everything—profits, losses, and unlimited personal liability for all business debts and legal disasters.
Washington follows the Uniform Partnership Act (Title 25, Chapter 25.05 of the Revised Code of Washington), which means partnerships operate under well-established rules. The problem isn’t the legal framework—it’s the complete absence of personal asset protection the framework provides.
But here’s where Washington gets particularly frustrating: unlike states where partnerships truly require “no paperwork,” Washington mandates that all partnerships get a state business license through their Business License Application process. You’re doing paperwork anyway—you’re just choosing to get zero protection for your effort.
The Partnership “Advantages” (And Why They’re Complete Myths in Washington)
Let me dismantle the supposed benefits people always mention:
“Advantage” 1: No State Filing Requirements
Reality check: This advantage is meaningless in Washington.
While you don’t file formation documents with the Secretary of State, you’re still required to:
- File a Business License Application with Washington Department of Revenue ($90)
- Get an EIN from the IRS (required for all partnerships)
- Register trade names/DBAs if you want a business name ($5 additional)
- Obtain local city/county business licenses
- Set up tax registrations
So you’re not avoiding bureaucracy—you’re just avoiding the one piece of paperwork that would actually protect you.
“Advantage” 2: Pass-Through Taxation
Reality check: LLCs have identical tax treatment.
Multi-member LLCs are taxed exactly the same as general partnerships in Washington. Both file Form 1065, both issue K-1s to owners, both avoid double taxation. This “advantage” completely evaporates when comparing partnerships to LLCs.
“Advantage” 3: Lower Costs
Reality check: Not in Washington.
Let’s do the real math:
- Partnership: $90 business license + $5 DBA = $95 minimum
- LLC: $200 filing fee
You’re saving $105 upfront to get zero liability protection in one of the most litigious business environments in the country. That’s catastrophically bad risk management.
The Partnership Disadvantages (The Nightmare Scenarios Nobody Discusses)
Now let’s talk about what actually matters in Washington’s business environment:
Disadvantage 1: Unlimited Personal Liability in Tech Central
This is the deal-breaker, especially in Washington’s business environment.
Every partner is personally liable for all partnership debts and legal judgments. Your business partner signs a $100,000 software contract and the business can’t pay? Creditors can take your personal house in Seattle or Spokane to satisfy the debt.
Even worse: in Washington’s tech-heavy economy, intellectual property lawsuits, employment disputes, and contract battles are common. Partnerships provide zero protection against any of these risks.
Disadvantage 2: Joint and Several Liability with No Escape
Here’s the terrifying part: you’re not just responsible for your own decisions—you’re financially responsible for everything your partners do.
Your partner gets the business sued for $250,000? You’re personally liable. Your partner makes unauthorized purchases? You’re responsible. Your partner violates employment laws? You could lose your personal assets.
Disadvantage 3: Washington’s Regulatory Complexity
Washington has some of the most complex business regulations in the country—employment laws, environmental regulations, tax requirements. Partnerships provide no protection when regulatory violations create liabilities.
Disadvantage 4: Credibility Issues in Professional Markets
In Washington’s competitive business environment—especially around Seattle and tech corridors—partnerships often appear less professional than LLCs to:
- Venture capital investors
- Corporate clients
- Banking institutions
- Insurance providers
When you’re competing for contracts with Amazon, Microsoft, or other major Washington employers, “Smith & Jones Partnership” sounds less established than “Smith & Jones LLC.”
Washington Partnership vs. Multi-Member LLC: The Brutal Truth
Let me break this down with actual numbers:
| Factor | General Partnership | Multi-Member LLC |
| State Filing Requirements | Business License: $90 | Certificate of Organization: $200 |
| Annual State Fees | $0 | $60 |
| Personal Liability Protection | None | Complete protection |
| Tax Treatment | Form 1065, K-1s | Form 1065, K-1s (identical) |
| Regulatory Compliance | Complex (no protection) | Complex (with protection) |
| Banking Relationships | Complicated | Straightforward |
| Investment Readiness | Poor | Excellent |
Look at those numbers. You’re saving $110 upfront and $60 annually to get zero protection in a state with complex regulations and high liability risks. That’s insane.
When a General Partnership Might Make Sense in Washington (Spoiler: Almost Never)
After 15 years in this business, I can think of exactly one scenario where I might consider recommending a general partnership in Washington:
Scenario 1: Testing a Business Idea for Weeks (Not Months)
If you’re testing a very low-risk business concept for a few weeks with a friend and plan to formalize as an LLC immediately, a partnership might work as an extremely short-term solution. But even then, given Washington’s regulatory environment, I’d probably still recommend starting with an LLC.
That’s it. One scenario with massive caveats. For everyone else, LLCs are the obvious choice.
How to Form a Washington General Partnership (If You Enjoy Financial Russian Roulette)
I’ve made my feelings about partnerships crystal clear. But if you’re determined to ignore my advice, here’s how to do it as safely as possible:
Step 1: Choose Your Partners Like Your Financial Life Depends on It (Because It Does)
You’re about to become personally liable for these people’s business decisions. Choose partners you’d trust with your mortgage payments—because effectively, you are.
Evaluate their:
- Financial responsibility and credit history
- Decision-making judgment under pressure
- Risk tolerance and business ethics
- Communication skills and conflict resolution abilities
Step 2: Create a Bulletproof Partnership Agreement
This isn’t optional in Washington’s complex business environment. The state’s default partnership rules won’t protect you from the unique risks of operating in Washington.
Your agreement must address:
- Ownership percentages and profit/loss allocation
- Management authority and decision-making processes
- Capital contribution requirements and procedures
- Partner withdrawal and expulsion procedures
- Dispute resolution mechanisms (mandatory arbitration recommended)
- Intellectual property ownership and protection
- Employment law compliance responsibilities
- Dissolution and asset distribution procedures
Step 3: Get an EIN from the IRS
All partnerships must obtain an Employer Identification Number for tax purposes. Apply online at irs.gov—it’s free and takes about 10 minutes.
Step 4: File Washington’s Required Business License Application
Despite what other guides say about “no paperwork,” Washington requires partnerships to file a Business License Application through the Department of Revenue.
This process includes:
- State business license ($90)
- Trade name/DBA registration ($5 if needed)
- Local city/county license coordination
- Tax registration setup
Create a SecureAccess Washington account and navigate their complex online system.
Step 5: Obtain All Required Local Licenses
Washington’s cities and counties have their own licensing requirements. Some coordinate through the state system, others require separate applications through FileLocal or individual city systems.
Step 6: Get Comprehensive Insurance (You’ll Need It)
Since you have zero liability protection, insurance becomes critical in Washington’s litigious environment:
- General liability insurance (minimum $1M coverage)
- Professional liability insurance (if applicable)
- Employment practices liability insurance
- Cyber liability insurance (especially important in Washington)
- Commercial auto insurance if vehicles are involved
This insurance will cost more than the LLC filing fee you’re trying to avoid.
Step 7: Open Business Banking (Prepare for Complications)
Separate business and personal finances completely. Washington banks will typically require:
- Partnership agreement signed by all partners
- EIN confirmation letter from IRS
- Business license approval from Washington DOR
- Trade name registration if applicable
- Photo ID for all partners
Expect more questions and complications than LLC owners face.
The Washington LLC Alternative (What I Actually Recommend)
Instead of a general partnership, here’s what I recommend for Washington entrepreneurs with business partners:
Form a multi-member LLC.
The advantages in Washington’s business environment are overwhelming:
- Identical tax treatment to partnerships (Form 1065, K-1s)
- Complete personal asset protection from business liabilities
- Professional credibility with investors, clients, and vendors
- Simplified banking and insurance relationships
- Regulatory compliance protection for Washington’s complex laws
- Investment readiness for venture capital or angel funding
Yes, it costs $200 vs. $90. That $110 difference is the best investment you’ll ever make.
Washington-Specific Business Risks That Make LLCs Essential
Having worked with numerous Washington businesses, here are state-specific factors that make partnerships particularly dangerous:
Tech Industry Liability Exposure
Washington’s economy centers around technology companies with enormous liability risks—intellectual property disputes, employment lawsuits, data breaches, contract violations. Partnerships provide zero protection against these common tech industry risks.
Employment Law Complexity
Washington has some of the most complex employment laws in the country—minimum wage variations by location, strict overtime rules, comprehensive anti-discrimination laws. Partnership structures provide no protection when employment violations create liabilities.
Environmental Regulations
From Puget Sound protection to air quality standards, Washington has strict environmental regulations. Businesses in manufacturing, construction, or logistics face significant compliance risks that partnerships don’t protect against.
High Litigation Rates
Washington’s sophisticated business environment generates high litigation rates. Contract disputes, employment lawsuits, and intellectual property battles are common. Partnerships leave you completely exposed.
Venture Capital and Investment Environment
Washington has an active venture capital and angel investment community. Investors strongly prefer LLC structures and may refuse to invest in partnerships.
Common Washington Partnership Mistakes That Destroy Finances
After seeing numerous business formations, here are Washington-specific mistakes that cause expensive disasters:
Mistake 1: Underestimating Employment Law Risks
Washington’s complex employment laws create enormous liability exposure. Partnerships provide no protection when employment violations occur.
Mistake 2: Ignoring Intellectual Property Protections
In Washington’s tech-heavy economy, IP disputes are common. Partnerships offer no protection for IP-related liabilities.
Mistake 3: Inadequate Insurance Coverage
Without LLC protection, partnerships need comprehensive insurance coverage. Many entrepreneurs underestimate these costs and coverage requirements.
Mistake 4: Poor Understanding of Regulatory Compliance
Washington’s environmental, employment, and business regulations are complex. Compliance violations can create massive liabilities that partnerships don’t protect against.
Mistake 5: Not Planning for Investment or Growth
Washington’s business environment favors rapid growth and investment. Partnerships create barriers to both venture capital and acquisition opportunities.
The Tax Reality: Partnerships vs. LLCs in Washington
Let me destroy the biggest myth about partnership taxation:
Multi-member LLCs are taxed identically to general partnerships in Washington.
Both structures:
- File Form 1065 informational returns with the IRS
- Issue K-1 statements to owners showing profit/loss shares
- Allow pass-through taxation (no entity-level taxes)
- Qualify for identical business deductions
- Face the same Washington state tax obligations
The tax treatment is absolutely identical. Any guide suggesting partnerships have tax advantages over LLCs is providing wrong information.
Washington’s Business License Reality Check
Here’s what partnership guides don’t tell you about Washington’s “simple” licensing:
Required for All Partnerships:
- State Business License Application ($90)
- Local city/county licenses (varies by location)
- Industry-specific licenses (if applicable)
- Tax registrations with Washington DOR
Optional but Recommended:
- Trade name/DBA registration ($5)
- Professional liability insurance registration
- Workers’ compensation registration (if hiring employees)
You’re not avoiding bureaucracy with partnerships—you’re just avoiding the protection that makes bureaucracy worthwhile.
When to Consider Other Business Structures in Washington
While I usually recommend LLCs over partnerships, sometimes other structures make sense:
Limited Liability Partnership (LLP)
For professional services where partnership structure is required by licensing requirements, LLPs provide better protection than general partnerships.
Corporation
If you plan to raise significant venture capital or go public (common in Washington’s tech environment), corporate structures might be better long-term choices.
Limited Partnership
For certain investment or real estate ventures, limited partnerships can provide tax benefits while limiting liability for passive investors.
But for most Washington small businesses with multiple owners? Multi-member LLC is the optimal choice.
My Bottom-Line Recommendation for Washington Entrepreneurs
After 15 years helping over 1,200 entrepreneurs, here’s my brutal honest advice for Washington business partnerships:
Skip the general partnership. Form a multi-member LLC immediately.
Washington’s complex regulatory environment, high litigation rates, and tech-heavy economy make personal asset protection essential. The $110 price difference between partnerships and LLCs is meaningless compared to the protection gap.
Don’t let the “no paperwork” myth trick you into financial disaster. You’re doing paperwork anyway in Washington—choose the option that actually protects your future.
Ready to Make the Smart Choice?
I know I’ve been harsh on general partnerships throughout this guide, but that’s because I’ve seen too many Washington entrepreneurs choose the “traditional” option and get destroyed when legal problems arise.
Washington’s business environment is too sophisticated and risky for unprotected business structures. Your partnership deserves better than zero protection.
If you’re ready to form a Washington multi-member LLC (the choice I actually recommend), check out our complete Washington LLC formation guide for step-by-step instructions.
If you want professional help with formation, services like Northwest Registered Agent (based in Washington) can handle the paperwork efficiently and understand local requirements.
But whatever you do, don’t let the “simple partnership” myth cost you your personal assets. Washington’s business environment is too challenging for inadequate protection.
Questions about your specific Washington situation? After 15 years of helping entrepreneurs navigate these decisions in complex business environments, I’ve seen most scenarios. Feel free to reach out—I’m always happy to provide straight advice about business structure choices.
Remember: the goal isn’t to start a business as traditionally as possible. The goal is to start a business that protects your future while positioning you for success in Washington’s competitive market.
Jake Lawson is an LLC Formation Strategist with over 15 years of experience helping entrepreneurs make smart business structure decisions. He’s guided more than 1,200 businesses through formation processes and has particular expertise in Washington’s complex regulatory and business environment. His insights have been featured in StartupNation, Global Entrepreneurs Network, and FinTech Weekly.