To start a therapy practice in Washington State, follow these seven steps: 

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1. Check local zoning regulations
2. Register a business name
3. Choose a business structure
4. Register your business
5. Obtain relevant licenses
6. Get insurance
7. Start paying taxes

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If you’re moving your practice from a different state, there’s an eighth step you’ll need to follow: Figuring out how to pay taxes in multiple states.

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This article covers the bare essentials needed to get your therapy practice up and running in the Evergreen State. For advice on budgeting, marketing your practice, and billing your clients, check out our general guide, How to Start a Therapy Practice.

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Check local zoning regulations in Washington

Washington boasts 39 counties and 281 municipalities. Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.

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In cases where you aren’t typically allowed to operate a business in a certain area—for instance, a home business in a residential area—you can apply for a zoning variance. A variance is more or less an exception to zoning laws. 

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For information on whether you need to apply for a variance, what types of zoning your town or city recognizes, and what kind of business you can perform there, use the Business License Wizard.

Register a business name in Washington

In Washington State, business names are referred to as “trade names.” Your business may operate under more than one trade name. 

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Do you need to register a name at all? If your therapy practice is a sole proprietorship, and you’d like to operate under your own name—eg. “Jane Smith”—you may do so without registering a business name. 

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If you want a name different from your own—eg. “Jane Smith Counseling”—or if you switch to a different business structure (for instance, an LLC), you’ll need to register an assumed name.

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You can register a trade name for your business when you complete a business license application using the Business License Wizard. Trade names are $5 each.

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Choose a business structure recognized by the State of Washington

Each state recognizes—and registers—different business structures (aka “entity types.”) Your practice’s business structure affects how its income is taxed and who may own shares of the practice.

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In Washington, the business structures you can choose from are:

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• Sole proprietorship
• General Partnership (GP)
• Limited Liability Company (LLC)
• Corporation
• Not-for-profit corporation
• Limited Partnership (LP)
• Limited Liability Partnership (LLP)

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This list is just an introduction. Before settling on a business structure, talk to your accountant—and, if necessary, a lawyer—for help choosing the right one. 

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For more information, check out our article How to Choose a Business Entity for Your Therapy Practice.

Sole proprietorship

When you go into business for yourself, you’re considered a sole proprietor by default. As a sole proprietorship, your business is identical with your person: all revenue is your revenue, all losses are your losses.

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Sole proprietorships are the simplest form of business structure, but offer nothing in the way of legal or financial protection.

General Partnership (GP)

In a general partnership, all members are general partners—meaning, they all share legal and financial liability equally.

Limited Liability Company (LLC)

The LLC business structure offers liability protection similar to a corporation, but with the option to be taxed in different ways. Your accountant may recommend you elect to be taxed as either an S corporation or a partnership.

Professional Limited Liability Company (PLLC)

A PLLC is similar to a PLLC, but with extra protections; it’s typically favored by professionals like lawyers and accountants, but any professional licensed with the state (including therapists) may form a PLLC. The PLLC structure protects each partner against outcomes of the other partners’ professional negligence. For instance, if one partner in a PLLC is sued by a client, the other partners are not liable.

Corporation 

A corporation exists separately from its owners, who own shares in it. There are two types: C corporations and S corporations. C corporations may elect S corporation status by filing IRS Form 2553.

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C corporations have their income taxed separately from the income of the shareholders. S corporations pass on the tax liability to each shareholder. (For a variety of reasons, Heard recommends its clients form S corporations at the federal level.)

Nonprofit Corporation

In Washington State, a nonprofit corporation is, in many cases, formed for charitable purposes. Nonprofit corporations planning to raise funds from the public are typically required to register with the Charities Program of the Washington Secretary of State.

Limited Partnership (LP)

A limited partnership offers some liability protection for some of its members. To operate as a limited partnership, at least one individual acts as a general partner, who heads the company and makes major decisions, while at least one other individual acts as a limited partner, who does not. 

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General partners have unlimited liability—they are personally liable for the partnership’s debts, legal proceedings, and so on. Limited partners are only liable for their controlling share of the partnership.

Limited Liability Partnership (LLP)

An LLP is similar to a limited partnership, but with extra protections; it’s typically favored by professionals like lawyers and accountants, but any professional licensed with the state (including therapists) may form an LLP. The LLP structure protects each partner against outcomes of the other partners’ professional negligence. For instance, if one partner in an LLP is sued by a client, the other partners are not liable.

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Register your therapy practice in Washington State

To register your business in Washington State, you need to do the following:

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1. Register a trade name
2. Register your business with the Secretary of State if you are forming a corporation, limited partnership, LLC, or LLP.
3. Apply for a business license from the State
4. Apply for a city endorsement based on your municipality
5. Receive your business license, Unique Business Identifier (UBI), and tax filing frequency from the Department of Revenue.

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Washington State does not collect income tax, but it does collect business and occupation (B&O) tax based on the gross receipts of each business operating in the state. In order to collect B&O tax, the State requires every business—including sole proprietorships—to apply for a business license.

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Before applying for a business license, if you plan on forming a corporation or limited partnership, or registering your practice as an LLC or LLP, you must first register with the Secretary of State. That means assigning a registered agent—someone over the age of 18 with a permanent address who can receive official correspondence from the State. That can be you or a different individual.

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In addition to a business license, you’ll need to apply for a city endorsement from the municipality where your therapy practice will be operating. (Some businesses in different industries must also apply for a state endorsement, but therapy practices do not.)

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Finally, once you’ve registered your business with the Secretary of State (if necessary), applied for a city endorsement, applied for a State business license, and been approved, you’ll receive correspondence from the Department of Revenue. It will include your business license (which must be displayed in your place of business), your UBI (which you’ll use for filing taxes and making changes to your business), and a schedule to follow when filing your excise tax (on a monthly, quarterly, or annual basis.)

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The entire process of starting a business in Washington State is made much simpler thanks to the Business License Wizard. Use this app to get information on every license or endorsement you need, as well as any zoning laws or permits, and then apply for them all at once (and pay any necessary fees) online. 

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Below, you’ll find step-by-step instructions for setting up each business structure with help from the Wizard.

Register a sole proprietorship in Washington State

1. Register a trade name.
2. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
3. Apply for your business license, etc. using the Wizard
4. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.

Register a general partnership in Washington State

1. Register a trade name.
2. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
3. Apply for your business license, etc. using the Wizard.
4. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.
5. Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.

Register an LLC or PLLC in Washington State

1. Register a trade name.
2. Create and file a Certificate of Formation to register with the Secretary of State. (You can find Certificate of Formation forms and file them online via the Secretary of State’s Charities and Corporations site.)
3. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
4. Apply for your business license, etc. using the Wizard.
5. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.

Incorporate in Washington State

1. Register a trade name.
2. Create and file Articles of Incorporation to register with the Secretary of State. (You can find Articles of Incorporation forms and file them online via the Secretary of State’s Charities and Corporations site.)
3. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
4. Apply for your business license, etc. using the Wizard.
5. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.

Register a limited partnership in Washington State

1. Register a trade name.
2. Register with the Secretary of State. (You can do so via the Secretary of State’s Charities and Corporations site.)
3. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
4. Apply for your business license, etc. using the Wizard.
5. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.
6. Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.

Register an LLP in Washington State

1. Register a trade name.
2. Register with the Secretary of State. (You can do so via the Secretary of State’s Charities and Corporations site.)
3. Launch the Business License Wizard and follow the steps onscreen to determine your business license, city endorsement, and local zoning/permit needs, as well as any fees that apply.
4. Apply for your business license, etc. using the Wizard.
5. After your application has been approved, review the correspondence you receive from the Department of Revenue, which will include your business license, UBI, and excise tax filing schedule.
6. Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.

Get business licenses and permits for your therapy practice in Washington

To operate in Washington State, your therapy practice will need a business license. Besides that, you may need additional permits and licenses based on your practice’s location. To get a list of all necessary permits, and apply for them online, use the Business License Wizard.

Get business insurance for your therapy practice in Washington

The following types of business insurance are highly recommended for therapy practices operating in Washington State:

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• General liability insurance
• Commercial property insurance
• Business income insurance
• Professional liability insurance
• Washington worker’s compensation insurance

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While shopping for insurance, look for a business owner’s policy (BOP). A BOP typically includes the three core types of insurance coverage: general liability, commercial property, and business income.

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Commercial general liability insurance protects you in case of any damages you cause to someone else’s property or person. 

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Commercial property insurance protects property your therapy practice owns, like computers, business phones, or office furniture. It also protects the building where you operate, whether owned or rented.

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Business income insurance covers you for loss of income due to specific circumstances. These include natural disasters, such as fire or storm damage; and man-made disasters, like theft.

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Professional liability insurance covers you in case you are sued for libel or slander, for mishandling patient records, for providing inaccurate advice, or for otherwise causing harm in the process of practicing your profession.

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If you have employees, you are legally required to have Washington State worker’s compensation insurance. This protects employees in the event of workplace injury or illness.

Prepare to pay taxes in Washington State

Washington does not collect individual income tax, but it does charge B&O tax on your gross receipts. To estimate your tax liability, check out this list of B&O tax rates based on business classification.

Learn how to pay taxes in multiple states

If you started your therapy practice in a different state, and you’re moving to Washington —or if you operate in Washington, and you’re planning to move to a different state—you’ll need to figure out how to pay taxes in multiple states.

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The rules vary depending on which states you operate in over the course of the year, and how long you spend in each. Check out How Moving to a Different State Impacts your Taxes as a Therapist.

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Heard specializes in bookkeeping, accounting, and taxes for therapy practices. See what Heard can do for you.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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