Let’s talk money—real money, not the fantasy numbers formation services advertise. Washington State charges $200 to form an LLC, which sounds reasonable until you discover the maze of additional costs waiting to ambush your budget. After helping 240+ entrepreneurs navigate Washington’s system, I can tell you exactly what you’ll actually spend.
Here’s the truth bomb: Your total first-year cost will likely hit $400-500 minimum, not the $200 everyone quotes. And that’s before hiring any professional help. The state’s “bulk registration” system for business licenses alone adds $90 plus city fees that nobody mentions upfront.
But here’s the flip side—Washington has no personal or corporate income tax. Zero. So while the upfront costs sting, the long-term tax savings can make it worthwhile. Let me break down every dollar you’ll spend, including the sneaky ones.
The Honest Cost Breakdown (Every Single Dollar)
Forget the marketing fluff. Here’s your actual Washington LLC budget:
Mandatory State Costs
Formation fees (one-time):
- Certificate of Formation + Initial Report: $200 (online)
- Or by mail: $180 + $30 = $210 (slower and more expensive)
- State Business License Application: $90 (required, not optional)
Annual fees (forever):
- Annual Report: $60/year
- City Business License renewal: $5-150/year (average $50)
- Specialty license renewal: $0-500/year (industry-specific)
The Hidden Costs That Bite
What nobody tells you about:
- City endorsements: Required separately from state license
- FileLocal registration: Additional layer for Puget Sound businesses
- Trade name registration: Only $5 but adds complexity
- B&O tax registration: Free but time-consuming
- UBI number acquisition: Included but poorly explained
Real example from last month: Seattle entrepreneur budgeted $200 for formation. Final cost? $485 after city license ($110), professional registered agent ($125), and specialty endorsement ($50).
State Formation Fees: The $200 Reality
Washington’s $200 online filing fee includes both your Certificate of Formation and Initial Report. Sounds simple, right? Here’s what they don’t advertise:
Online vs. mail filing trap:
- Online: $200 total, 5 business days
- Mail: $210 total ($180 + $30), 3-4 weeks
People think mail saves $20. It doesn’t. It costs MORE and takes forever. I’ve never seen someone happy they mailed it.
The timing gotcha:
File online Monday, approved by Friday. File by mail Monday, approved in late February. Your competitors launched three weeks ago.
Business License Maze: The $90+ Surprise
Washington requires EVERY LLC to get a state business license before operating. Not optional. Not “eventually.” Before you make your first dollar.
The “bulk registration” confusion:
This $90 application isn’t just a license—it’s a mega-registration that includes:
- State business license (permanent)
- Tax account setup
- Employer accounts (if applicable)
- Department registrations
- UBI number assignment
City license complications:
Your city license depends entirely on location:
- Seattle: $110-225/year
- Spokane: $113/year
- Tacoma: $40-90/year
- Small towns: $5-25/year
- Unincorporated areas: Sometimes $0
Specialty endorsements (the expensive wild card):
Certain industries need additional licensing:
- Contractors: $113+ registration
- Food service: $400+ permits
- Professional services: $100-500
- Cannabis-related: Don’t ask (thousands)
I had a client open a simple consulting LLC in Bellevue. State license: $90. City license: $145. Total surprise: $235 on top of formation.
Registered Agent: Free vs. Smart
Washington requires a registered agent with a Washington address. You have options:
Option 1: DIY (Free but problematic)
- Cost: $0
- Reality: Your address goes public
- Bigger reality: Spam avalanche within weeks
- Biggest reality: Must be available 9-5 every weekday
Option 2: Professional service ($50-300/year)
- Budget services: $50-75/year (basic, often offshore support)
- Quality services: $125-150/year (domestic support, reliable)
- Premium services: $200-300/year (attorney-backed, extras)
My take after seeing hundreds of choices: The $125/year for a quality service like Northwest Registered Agent pays for itself in privacy and peace of mind. Your home address on public records is a mistake you can’t undo.
Annual Report: The $60 Recurring Hit
Every Washington LLC pays $60 annually for their Annual Report. No exceptions, no discounts, no forgetting.
Critical timing details:
- Due: During your anniversary month
- Not calendar year—your specific formation month
- Form in June? Report due every June
- Miss it? Penalties start immediately
The dissolution threat:
Miss two Annual Reports and Washington administratively dissolves your LLC. Not suspended—dissolved. Reinstating costs $210 plus back fees and penalties.
Client horror story: Forgot Annual Report for two years. Dissolution notice arrived during loan application. The bank denied. Business nearly failed. Don’t be this person.
Operating Agreement: Free to Expensive
Washington doesn’t legally require an operating agreement, but try opening a bank account without one.
Your options:
- DIY from templates: $0 (risky if complex)
- Online services: $50-200 (usually adequate)
- Attorney-drafted: $500-2,500 (necessary for complex structures)
When to pay for professional help:
- Multiple members with unequal ownership
- Investor involvement
- Complex profit sharing
- Special voting arrangements
- Exit strategy provisions
For single-member LLCs with simple structures, a good template works. For anything complex, pay the attorney. Lawsuits cost more than lawyers.
EIN: Always Free (Ignore the Scammers)
Your Employer Identification Number from the IRS costs exactly $0. Forever. Always.
The scam ecosystem:
- “EIN filing services”: $50-150 (total ripoff)
- “Expedited EIN”: $75-200 (doesn’t exist)
- “Professional EIN assistance”: $100+ (unnecessary)
Reality: Apply yourself at IRS.gov. Takes 15 minutes. Receive immediately. Free.
Anyone charging for “EIN services” is marking up a free government service. It’s like charging someone to breathe air.
Banking Costs: The Monthly Drain
Your LLC needs a business bank account. Here’s what Washington banks actually charge:
Major bank monthly fees:
- Chase: $15/month (waivable with $2,000 balance)
- Bank of America: $16/month (waivable with activity)
- Wells Fargo: $10-40/month (depends on account type)
- KeyBank: $20/month (various waiver options)
Credit union alternatives:
- BECU: Often $0 with minimal requirements
- Sound Credit Union: $5/month or less
- Local credit unions: Usually cheapest option
Online-only options:
- Novo: $0/month (limited features)
- Relay: $0/month (good for basics)
- Mercury: $0/month (tech-focused)
Pro tip: Credit unions beat banks for small LLCs. Lower fees, better service, more flexibility.
Tax Implications: The Good News
Washington’s tax structure actually favors LLCs:
What you DON’T pay:
- Personal income tax: 0%
- Corporate income tax: 0%
- LLC entity tax: None
What you DO pay:
- B&O tax: 0.471%-1.75% on gross receipts (not profit)
- Sales tax: 6.5% state + local (if selling goods)
- Federal taxes: Unavoidable anywhere
The B&O tax reality check:
This gross receipts tax confuses everyone. You pay on revenue, not profit. Made $100,000 but lost money? Still owe B&O tax. Different rates for different industries:
- Service businesses: 1.5% (or 1.75% for some)
- Retail: 0.471%
- Manufacturing: 0.484%
- Wholesale: 0.484%
Small business credit available for under $28,000 in B&O tax annually, which helps smaller LLCs.
Industry-Specific Costs
Some industries face additional licensing costs:
Construction/Contractors:
- Contractor registration: $113
- Bond requirement: $6,000-12,000
- Liability insurance: $500-2,000/year
Food Service:
- Health permits: $400-600
- Food handler permits: $10-15 per person
- Annual inspections: $200-400
Professional Services:
- Professional licensing: $100-500
- Continuing education: $200-1,000/year
- Professional liability insurance: $1,000-5,000/year
Cannabis Industry:
- Application fees: $250
- License fees: $1,480-5,000
- Local fees: Varies wildly
- Total reality: $10,000+ minimum
Foreign LLC Costs (Out-of-State Businesses)
Already have an LLC elsewhere? Registering as a foreign LLC in Washington costs:
- Foreign Registration Statement: $200
- Registered Agent: $125/year (can’t use out-of-state address)
- Annual Report: $60/year
- Business licenses: Same as domestic LLCs
Total first-year foreign LLC cost: About $475 minimum
My advice? Unless you have a compelling reason, just form a Washington LLC if operating here. Simpler, often cheaper long-term.
Professional Service Costs Comparison
DIY Route:
- Formation: $200
- Total with basics: $290 (including state business license)
- Time investment: 10-15 hours research and filing
- Risk: Moderate (common mistakes fixable but annoying)
Budget Services (Incfile, etc.):
- Formation: $0-49 + state fee
- Hidden costs: $200-400 in upsells
- Real total: Usually $400-600
- Quality: Hit or miss
Quality Services (Northwest, ZenBusiness):
- Formation: $39-100 + state fee
- Transparent pricing: What you see is real
- Total with registered agent: $400-450 first year
- Worth it for most people
Attorney Formation:
- Formation: $1,500-3,000 total
- Includes: Custom operating agreement, tax planning
- Worth it if: Complex structure, multiple members, investors
Money-Saving Strategies That Actually Work
Legitimate ways to reduce costs:
- Form early in the month: Annual Report due at month-end gives you almost a full year
- Choose your location wisely: Unincorporated areas save on city licenses
- Bundle services intelligently: Some providers include registered agent free for year one
- Use credit unions: Lower banking fees than major banks
- File online always: Saves money and weeks of time
False economies to avoid:
- Skipping registered agent (privacy nightmare)
- No operating agreement (banking problems)
- Delaying business license (penalties accumulate)
- Choosing Delaware/Wyoming (double taxation and fees)
- Using “free” formation services (upsell city)
Your Washington LLC Budget Timeline
Month 1 costs:
- Formation: $200
- Business License Application: $90
- City License: $50 (average)
- EIN: $0
- Month 1 total: $340
Year 1 additions:
- Registered Agent: $125
- Banking fees: $60 (assuming $5/month)
- Year 1 total: $525
Annual ongoing:
- Annual Report: $60
- City license renewal: $50
- Registered Agent: $125
- Banking: $60
- Annual maintenance: $295
The Bottom Line on Washington LLC Costs
Washington isn’t the cheapest state to form an LLC—that $200 formation fee plus $90 business license puts you at $290 minimum before any city requirements. Add realistic costs and you’re looking at $400-500 for year one.
But—and this is huge—no state income tax saves thousands annually once profitable. The B&O tax on gross receipts stings, but most businesses still come out ahead versus income tax states.
Washington makes sense if:
- You’re operating in Washington (obviously)
- You value no income tax over low formation costs
- You can handle the gross receipts tax model
- You’re in tech, services, or e-commerce
Look elsewhere if:
- You’re purely investment/holding company (Wyoming cheaper)
- You need maximum privacy (Nevada better)
- You’re not connected to Washington (form where you are)
Ready to form? Budget $500 for year one to be safe. Use a quality service like Northwest Registered Agent if you value time and privacy, or DIY if you’re detail-oriented and have time to learn.
Either way, stop agonizing over $50 differences in formation services. The real money is made running your business, not saving pennies on filing fees.
Now quit calculating and start building. Your LLC costs what it costs—your business success is what matters.
Jake Lawson has formed over 1,200 LLCs nationwide, with extensive experience in Washington State’s unique business environment. When not explaining B&O tax calculations, he’s probably stuck in Seattle traffic wondering why anyone complains about a state with no income tax.