How to Form a
Washington Corporation

Washington charges $200 to file Articles of Incorporation online at the Secretary of State Corporations & Charities Division (ccfs.sos.wa.gov). Paper filings cost $180 (yes, $20 cheaper than online — the rare US state where paper undercuts online), but paper adds 4–6 weeks of processing vs same-week online. Expedited processing is +$50 for next-business-day. Within 120 days of formation you must also file an Initial Report ($10) under RCW 23B.16.220 identifying directors, officers, and principal office address. Eleet AI charges $349 all-inclusive — $149 service + $200 state fee + Initial Report preparation + registered agent for year one + filed documents delivered to your portal. National providers advertise $0–$299 formation but add the $200 state fee, $125–$299/yr registered agent, $10 Initial Report (often missed entirely), $50–$99 EIN upsell, and 'compliance packages' separately — real total lands $499–$850+.

Yes — and no. Washington imposes NO state corporate income tax and NO state personal income tax under Wash. Const. art. VII (which courts have interpreted to bar a graduated income tax). That's the genuine differentiator vs CA 8.84% / NY 7.25% / MA 8% / OR 7.6%. But the headline is misleading without disclosing what Washington DOES tax: the BUSINESS & OCCUPATION TAX (B&O) under RCW 82.04 is a GROSS RECEIPTS tax with NO deduction for cost of goods sold or operating expenses. A startup with $1M revenue and a -$500K operating loss still owes B&O on every dollar of receipts. Rates by classification: Manufacturing 0.484%, Wholesaling 0.484%, Retailing 0.471%, Service & Other Activities 1.5%, Specified Service Activities (advanced computing/tech) 1.75% above $1M. A SaaS company classified as Service pays $15,000 on $1M revenue. Plus city B&O (Seattle 0.215%–0.4275%, Bellevue 0.149%–0.18%, Spokane 0.1265%–0.42%) stacks on top. Net effect: WA's tax burden is genuinely lower than CA/NY for high-margin businesses but can be HIGHER for low-margin / pre-profit businesses since you pay on gross.

Under RCW 82.04, the B&O is Washington's primary business tax. Applied to gross receipts (not net income), so deductions are limited (only specifically listed deductions like bad debt, sales returns, certain interstate exemptions). Rate by classification: Manufacturing 0.484%, Wholesaling 0.484%, Retailing 0.471%, Service & Other Activities 1.5%, Royalties 0.484%, Insurance Agents 0.4843%, Public Road Construction 0.484%, Specified Service Activities 1.75% above $1M (RCW 82.04.290 and successor sections target advanced computing, technology, and consulting). Multi-classification businesses file each line separately on Form REV 41 0001 (the Combined Excise Tax Return) due monthly, quarterly, or annually depending on gross receipts. Small businesses qualify for the SMALL BUSINESS CREDIT under RCW 82.04.4451 — phased out between $28K and $56K monthly tax due, effectively zero B&O for businesses below ~$56K/mo gross. Filings via dor.wa.gov MyDOR portal. Most common audit issue: misclassification (a software company calling its revenue "wholesaling" instead of "service" pays 0.484% vs 1.5% — DOR catches this).

Enacted in 2021 and upheld by the Washington Supreme Court in Quinn v. State, 200 Wn.2d 581 (March 2023), Washington imposes a 7% excise tax on long-term capital gains by INDIVIDUAL Washington residents above a $250,000 annual exemption (RCW 82.87). The court held the tax is an excise on the act of selling, not an income tax (which would have been unconstitutional under Wash. Const. art. VII § 1). Critically: it applies to INDIVIDUALS, not entities. Corp-level gains are not subject to WA tax (federal only). For founders, this matters most at liquidity: a WA-resident founder selling $10M in corp stock owes $682,500 in WA capital gains tax (7% × $9.75M above the $250K exemption). Exemptions: real estate, retirement accounts (401k/IRA), livestock, timber, certain qualified family-owned business sales, charitable distributions, and gains exempted under federal tax code. Filed on Form CGT-1 due April 15. Has motivated some pre-IPO WA-resident founders to relocate to NV/TX/WY/FL for the year of sale (residency-based — must be domiciled out of state for the entire taxable year).

Title 23B RCW — the Washington Business Corporation Act — was enacted in 1989 (Ch. 165, Laws of 1989), based on the Model Business Corporation Act, with substantial revisions in 2017 under SHB 1361 (modernizing several governance provisions and adding shareholder-action consent flexibility). Key sections: RCW 23B.02.020 (Articles of Incorporation requirements — name, authorized shares, registered agent, incorporator), RCW 23B.04.010 (corporate name standards — must contain "Corporation," "Incorporated," "Company," "Limited," or abbreviation), RCW 23B.06 (shares and capital — par value optional, no-par permitted), RCW 23B.07.040 (shareholder action without a meeting — written consent), RCW 23B.08.300 (director duty of care — good faith with the care of an ordinarily prudent person), RCW 23B.08.320 (limitation of director liability — exculpation provision similar to DGCL § 102(b)(7) with explicit carve-outs), RCW 23B.08.500 et seq (officer designations and duties), RCW 23B.10 (amendments to articles), RCW 23B.11 (mergers and exchanges), RCW 23B.13 (dissenters' rights / appraisal — broadly tracks DGCL § 262), RCW 23B.14 (dissolution), RCW 23B.15 (foreign corporations), RCW 23B.16.220 (Initial Report and Annual Report). MBCA familiarity makes WA approachable for out-of-state counsel.

Within 120 days of filing your Articles of Incorporation, every Washington corporation must file an Initial Report with the Secretary of State Corporations & Charities Division (ccfs.sos.wa.gov) under RCW 23B.16.220. The fee is $10. The report identifies: (1) the corporation's principal office address; (2) the registered agent name and registered office street address; (3) directors' names and addresses; (4) officers' names and addresses (typically president, treasurer, secretary). Miss the 120-day deadline and the Secretary of State adds a $25 late fee. Continued failure to file can trigger administrative dissolution proceedings. This requirement is unusual — most US states either bundle this into the Articles or eliminate it entirely. Eleet AI files the Initial Report as part of our $349 formation package; if you DIY-form and miss this, expect a Secretary of State notice in month 4 or 5.

Under RCW 23B.16.220, every Washington corporation must file an Annual Report before the END of the corporation's anniversary month each year (the anniversary month is the month in which the Articles of Incorporation were originally filed). The fee is $60. Filed online at ccfs.sos.wa.gov via the Corporations & Charities Filing System. The Annual Report updates: principal office address, registered agent and office, directors, officers, and email contact. Miss the deadline and the Secretary of State adds a $25 late fee plus begins administrative dissolution after 30 days delinquent. Reinstatement after administrative dissolution requires filing all missed Annual Reports plus a $140 reinstatement fee under RCW 23B.14.220. WA's $60 annual fee sits in the moderate tier — cheaper than MA $125 or CA $25 + $800 franchise tax, more expensive than NY $9 biennial or AL $0 (after the 2024 BPT reform). Eleet AI offers Annual Report filing service at $99/yr for years 2+.

Seattle imposes its own CITY business taxes that stack on top of state B&O. CITY B&O under Seattle Municipal Code Title 5 ranges 0.215%–0.4275% by classification (Retail Services 0.215%, Wholesaling 0.215%, Manufacturing 0.215%, Services & Other 0.4275%, Insurance Brokers 0.4275%). Filed on the Seattle Combined Tax Return at filelocal-wa.gov. PLUS the JUMPSTART PAYROLL EXPENSE TAX under SMC 5.38, enacted 2020 effective Jan 1 2021: applies to BUSINESSES WITH >$8.135M (2025 threshold, indexed) in Seattle payroll, taxed at 0.7%–2.4% on COMPENSATION above $176,473/yr per employee (also indexed). Tier 1 (payroll $8.135M–$1.137B): 0.7% on compensation $176,473–$444,000, 1.7% on compensation above $444,000. Tier 2 ($1.137B–$2.014B): 0.7%/1.9%. Tier 3 (>$2.014B): 1.4%/2.4%. Microsoft, Amazon, and Expedia are the primary payers — JumpStart raised ~$300M in 2024. For a 30-person Seattle tech team averaging $250K compensation (well below the per-employee threshold), JumpStart impact is zero unless total payroll crosses $8.135M. For a 150-person team averaging $250K = $37.5M payroll, all 150 employees above $176K = ~$170K/yr in JumpStart. Bellevue, Tacoma, Spokane, Everett, and Vancouver WA each impose their own city B&O at varying rates — honest mapping needed before signing a lease.

Effective July 1, 2023, Washington imposes a 0.58% payroll tax on ALL W-2 wages (no income cap) under RCW 50B.04 to fund the WA Cares long-term care benefit. The tax is paid 100% by the employee via payroll withholding (employer remits but does not match, unlike FICA). For a $150K W-2 employee, WA Cares = $870/yr. For a $300K W-2 executive, $1,740/yr. No cap means high earners pay materially more than equivalent earners in non-WA-Cares states. Some employees opted out via private long-term care insurance during a one-year window in 2021 (closed permanently 11/1/2021 for new hires) — that opt-out is grandfathered for those individuals only. WA Paid Family & Medical Leave under RCW 50A.04 adds another 0.74% (split ~73% employee / 27% employer, premiums adjust annually). WA workers' comp via Department of Labor & Industries adds $1.50/$100 average (varies by industry — light office work ~$0.30, heavy construction $5+). WA unemployment insurance adds variable rates 0.27%–6.02% on first $72,800 of wages. Total WA payroll burden runs 3–6% above federal-only — high vs no-state-payroll-tax states like TX/FL/NV.

Online filing via ccfs.sos.wa.gov processes in 2–3 business days standard. Expedited processing for +$50 brings it to next business day (usually same day if filed before 11:00 AM Pacific). Paper filings take 4–6 weeks (counterintuitive — paper is $180, online is $200, so paper "saves" $20 but adds 6 weeks of delay). Eleet AI files online expedited by default and includes tracking updates to your customer portal. Once your Articles are stamped, you have 120 days to file the Initial Report ($10) — Eleet AI handles this within 2 business days of formation acceptance. Before your Articles of Incorporation are stamped, you cannot open a business bank account in the corporation's name, sign contracts as the corporation, issue stock, or file an S-Corp election retroactive to formation.

After your Articles of Incorporation are stamped: (1) File the Initial Report within 120 days at ccfs.sos.wa.gov ($10) — Eleet AI handles this. (2) Adopt bylaws — WA does not file bylaws with the state but every corp must adopt them at the organizational meeting (or via written consent under RCW 23B.07.040). (3) Hold the organizational meeting — elect directors, appoint officers (WA requires at minimum a president and secretary under RCW 23B.08.500; same person may hold multiple offices), adopt bylaws, authorize founder-stock issuance. (4) Apply for a federal EIN at IRS.gov (free, 5 minutes online). (5) Issue founder stock and file Section 83(b) elections with the IRS within 30 days if stock is subject to vesting — missing the 30-day window is a tax error that cannot be fixed later. (6) Register with the WA Department of Revenue at dor.wa.gov via the Business Licensing Service (BLS) — this single registration covers state B&O, sales/use tax, employer registration, and most industry-specific endorsements. The BLS UBI (Unified Business Identifier) number is your primary state identifier. (7) Register with WA Department of Labor & Industries at lni.wa.gov for workers' comp (mandatory for any employer). (8) Register with WA Employment Security Department at esd.wa.gov for unemployment insurance. (9) Register with WA Cares (automatic via L&I once you have W-2 employees). (10) If operating in Seattle, register at filelocal-wa.gov for Seattle city B&O + JumpStart if applicable. (11) Open a business bank account. (12) Calendar the first Annual Report — anniversary month next year. (13) Calendar quarterly B&O return filings if your gross receipts trigger quarterly cadence (annual receipts ~$28K/mo).

If you are planning to raise venture capital, the answer is Delaware regardless of whether your engineering team is in Bellevue or South Lake Union. Every Andreessen Horowitz, Sequoia, Madrona Venture Group, Maveron, Voyager Capital, and Bezos Expeditions term sheet defaults to DGCL. The NVCA Model Term Sheet, YC SAFE, Series Seed templates, and every major-firm Delaware-default assumption make DE conversion nearly inevitable for priced rounds. A DE-to-WA conversion is unusual; the cleaner path is to form a Delaware C-Corp from day one (Eleet AI offers de-corp-formation at $438 all-in — see our Delaware corporation formation guide), then foreign-qualify into WA at $200 + $60/yr Annual Report. The Microsoft / Amazon / UW Allen School talent pool, Seattle coworking, and Pacific Northwest VC ecosystem are all available to a Delaware C-Corp doing business in WA exactly as they would be to a WA-domiciled corp. Exception: a bootstrapped/PNW-rooted founder building a profitable services business with no VC ambitions can domicile in WA — the no-state-income-tax + no-personal-income-tax profile is genuinely advantageous for owner-operators retaining all profits. But if Series A is even a possibility within 24 months, form Delaware day one.

Form a WA corporation when your operations are genuinely Pacific Northwest-rooted AND the no-state-income-tax + Microsoft/Amazon/Boeing talent ecosystem advantages outweigh the B&O gross receipts tax + WA Cares + JumpStart layer. WA is right for: (1) Profitable bootstrapped tech/services businesses where the no-state-income-tax + no-personal-income-tax profile genuinely beats CA/NY/OR alternatives (a $1M-revenue / $400K-profit / $200K-distribution Seattle services LLC saves ~$25K/yr vs equivalent OR domicile); (2) Boeing/aerospace supplier corps with Puget Sound manufacturing nexus; (3) Amazon/Microsoft/Costco supplier ecosystem; (4) Pacific seafood / agriculture / timber / Hanford nuclear cleanup contractors with WA nexus; (5) Family-owned PNW operating businesses with no IPO ambitions; (6) Real estate corps with WA property holdings (REET applies regardless of domicile, so domicile follows operations). WA is NOT the right answer for: VC-bound tech startups (form Delaware, foreign-qualify into WA); anonymous holding companies (WY $60/yr anonymous under W.S. § 17-29-201 or NM $50 + no annual + anonymous — WA Initial Report requires director/officer disclosure); pre-revenue cost optimizers (MS $50, AR $50, KY $40, NM $50 — the lifetime difference over 10 years exceeds $2,000 on the WA stack); pure real-estate holding corps with zero WA nexus (form in the property's state); WA-resident high-income founders anticipating $1M+ liquidity events should model the 7% Capital Gains Excise carefully (WA-CGT exposure can exceed the savings from no income tax). The honest answer: if DE is plausible for funding, DE wins; if operational WA nexus is genuine and bootstrapped/profitable, WA's no-income-tax profile is real but the B&O gross receipts tax is real too — model your unit economics before assuming WA is the cheap state.