Common Business Terms in Washington State

This list of terms are designed for people who are new to owning a business, especially those who are not familiar with Washington state terms or are non-English speakers. It uses simple language to explain common business terms used in the state and are not legal definitions. Many, but not all the terms are found in the Small Business Guide.

Administrative Dissolution: Termination (dissolution) of a Washington corporation or other entity by the Secretary of State because the entity failed to meet a requirement in statute, such as filing an annual report or maintaining a registered agent.

Agent: Anyone authorized to act on behalf of another. See Registered Agent

Amendment: A document filed to change certain business information recorded in the Articles of Incorporation or Certificate of Formation. Non-Washington businesses may amend their Certificate of Authority.

Annual Report: A required annual filing listing governors and other required information. May be filed online with the Corporations and Charities Filing System (CCFS).

Apostille: A certification of a notary, state, or county official on a legal document (adoption, marriage, divorce, etc.) for use in another country, according to the 1961 Hague Convention. The certification attests to the authenticity of the notary, state, or county official only, not the legality or accuracy of the documents themselves.

Articles of Incorporation: Document filed with the Secretary of State to create a corporation.

Asset: Anything valuable your business owns (e.g., cash, equipment, property).

B&O Tax (Business and Occupation Tax): A Washington state tax on money your business earns, even if you don’t make a profit. Most businesses must file it.

Balance Sheet: A financial report showing what your business owns and owes at a specific time.

Business License: A legal document that lets you run a business in Washington. You apply through the Washington State Department of Revenue.

Business Plan: A written document that explains your business goals, how it will make money, and what you need to get started. Useful when applying for loans or grants.

Business Structure: The way your business is legally organized (e.g., LLC, sole proprietor). This affects taxes, liability, and paperwork.

Bylaws: The governance rules for corporations, detailing how they are managed and how decisions are made.

Capital: Money or assets used to start or grow your business.

Cash Flow: The movement of money in and out of your business. Shows if you can pay bills.

Certificate of Authority: A document applied for by a non-Washington entity with the Secretary of State to do business in the state of Washington.

Certificate of Existence: Certificate issued to certify the records in the Secretary of State’s office are current and authorized to do business in the state of Washington. Order online.

Certificate of Formation: Filing records to form a Limited Liability Company with the Secretary of State.

Certificate of Incorporation/Formation/Registration: A certificate issued at the time of Incorporation, Formation, Registration of a business record.

Charitable Nonprofit Corporation: Charitable Corporation is defined as a domestic nonprofit corporation that is operated primarily or exclusively for one or more charitable purposes. Further a Charitable Purpose is described as a corporation organized and operated exclusively for that purpose eligible to be exempt from taxation under section 501(c)(3) of the internal revenue code.

Charity: Is any individual or entity that "solicits or collects donations or fundraises in Washington state” to support a charitable activity.

City Business License: Many cities in Washington (like Seattle or Spokane) require an extra license to do business within their city limits.

Contractor License: A license required for businesses operating in construction-related fields, including general contractors and specialty trades, often requiring bonding and insurance.

Corporation: A legal entity, a corporation has certain rights, privileges, and liabilities beyond those of an individual. Doing business as a corporation may yield tax or financial benefits, but these can be offset by other considerations, such as decreased personal control. Corporations may be formed for profit or nonprofit purposes.

Credit: Money your business borrows or time allowed to pay for something.

Department of Revenue (DOR): The state agency that handles business licensing and collects taxes. You’ll use their website a lot.

Doing Business As Names (DBAs): All Washington/Domestic Entity DBAs and Trade Names are recorded with the Department of Revenue. Please contact DOR to record a DBA or Trade Name. If a foreign entity registering with DOR has a business name in their home jurisdiction that is unavailable in Washington, or their designation does not meet Washington statutory requirements, they must choose an alternate name (DBA) to use in Washington, which includes the correct designation. Refer to RCW 23.95.525 for more information.

Domestic Entity: A Washington State corporation or business that is registered to do business in the state.

EIN (Employer Identification Number): A federal identification number for your business from the Internal Revenue Service. You need it to hire workers, open a business bank account, and file taxes.

Entity: This may be a corporation, limited partnership, limited liability company, or any other business structure except Sole Proprietor.

Equity: The value of your business after subtracting all debts.

Executor: The person(s) forming a limited liability company and signing the Certificate of Formation.

Expenses: The costs to run your business day-to-day.

Federal Tax Forms: Forms required by the Internal Revenue Service for reporting income, payroll taxes, and other business-related financial activities, including Form 1040 (for sole proprietors), Form 1120 (for corporations), and Form 1065 (for partnerships).

Foreign Entity: A corporation or business that has been formed or incorporated in another State, Territory, Tribe, or Country that is registered to do business in Washington state.

Governor / Governing Person(s): Any director, partner, general partner, manager, member, or any other person under whose authority the powers of an entity are exercised and under whose direction the activities and affairs of the entity are managed pursuant to the organic law and organic rules of the entity. An entity (business) cannot be its own governor.

Grant: Free money for your business (you don’t pay it back). Often from the government or nonprofits. Grants are usually competitive and have specific rules.

Gross Revenue: Gross Revenue is the amount of money a business takes in during its accounting year.

Incorporator: The person(s) who signs the Articles of Incorporation.

Initial report: All domestic business entities other than LLPs or Nonprofit Corporations can file this when or within 120 days of incorporating/forming.

Interest: The extra money you pay when you borrow money.

Labor & Industries (L&I): A state agency that protects workers. You register with L&I if you hire employees or need workers' compensation insurance.

Liability: What your business owes, like loans or bills.

LLC (Limited Liability Company): A type of business that protects your personal property (like your house or car) if your business gets sued or owes money.

Loan: Money you borrow and promise to pay back with interest.

Managers: Individuals responsible for the management of a limited liability company (LLC). Members of an LLC may also serve as managers. A manager does not need to be a person; it can be a business.

Market Analysis: A research process used to identify the demand for a product or service, assess the competition, and determine the target market.

Marketing Plan: A strategy outlining how a business will attract and retain customers, including pricing, advertising, promotions, and sales approaches.

Members: The owner(s) of a limited liability company (LLC) who may also be managers. A nonprofit under 24.03A is required to state whether they have members and have the option to add member names when incorporating.

Merger: Combination of two or more business entities in which one survives, and the other(s) cease to exist.

NAICS Code: A number that describes what your business does (e.g., food service, construction). The state uses it to classify your business.

Name Availability: Name availability is determined when staff are processing a formation, incorporation, registration, or amendment by performing a search to determine the business name is not identical to another business already on file.

Name Registration: The registration of business name by a non-Washington entity. Filing a Name Registration reserves a business name and/or prevents others from using the name in Washington state. A Name Registration is renewable.

Nature of Business: This is a brief description of the nature of the entity's business. This information can be updated through the annual report if you are within 180 days of your due date. If outside of this 180-day window, then this must be updated through an amended annual report.

Nonprofit Corporation: This is an entity and in Washington state, is typically formed under RCW Title 24.

Operating Agreement: A governance document for limited liability company’s (LLCs) that outlines the structure, roles, and responsibilities of its members.

Operations Plan: A section of the business plan that details how the business will function, including inventory management, supply chains, daily operations, and the responsibilities of team members.

Paid Family and Medical Leave (PFML): A state-mandated program that provides employees with paid leave for family or medical reasons, funded by employer and employee contributions.

Partnership: A business owned by two or more people. They share profits, losses, and responsibilities.

Payroll: The process of paying employees for their work, including the calculation of wages, taxes, and other deductions, as well as the associated recordkeeping and reporting.

Principal Office: The office, in or out of this state, so designated in the annual report where the principal executive offices of a domestic or foreign corporation are located.

Professional Corporation: A professional corporation formed under specific state laws requiring a special license to perform their duties, e.g., attorneys, counselors, etc. In Washington, the professional laws are under RCW 18.100.

Registered Agent: The person, entity, or office/position title named in public documents to receive notices or service of process. Registered agent information may be changed on an annual report, amended annual report, or statement of change, all of which can be found online.

Registered Office: The office address where the Registered Agent must be located during business hours.

Reinstatement: Document filed to return a business entity that has been administratively dissolved (terminated) by the Secretary of State's office to active status.

Reseller Permit: If you sell products to customers, you may not need to pay sales tax on things you buy for resale. This permit lets you skip that tax. Once registered, a business can reach out to the Department of Revenue (DOR)

Restated Articles of Incorporation: A combination of the corporation's articles of incorporation and subsequent amendments into one current document.

Revenue: Money your business earns from selling products or services.

Revised Code of Washington (RCW): The Revised Code of Washington (RCW) is the compilation of all permanent laws now in force. It is a collection of Session Laws (enacted by the Legislature, and signed by the Governor, or enacted via the initiative process), arranged by topic, with amendments added and repealed laws removed. It does not include temporary laws such as appropriations acts. The official version of the RCW is published by the Statute Law Committee and the Code Reviser.

Sales Tax: A tax you charge your customers when they buy goods or certain services. You collect it and send it to the Department of Revenue.

Secretary of State (SOS): This office helps you register your business if it’s a corporation, LLC, or nonprofit. It’s the first step before getting your business license.

Shareholder: Shareholders are a person or business (entity) that owns shares in a company, which means they are part-owners of the business. They have certain rights, like voting for the board of directors, receiving dividends, and getting a share of the assets if the company is sold. However, being a shareholder does not give them control over the company. Shareholders can be individuals, corporations, institutions, governments, trusts, or partnerships.

Small Business Liaison Team (SBLT): A group of state agencies that work together to help small businesses navigate rules and regulations.

Sole Proprietor: A simple business type where one person owns everything. Easy to start, but you’re personally responsible for all debts. You register with the Department of Revenue.

Taxpayer Identification Number (TIN): A number issued by the Internal Revenue Service used for tax purposes. Sole proprietors can use their Social Security Number (SSN), but businesses with employees typically require an Employer Identification Number (EIN).

Trade Name (DBA): If your business uses a name different from your legal name, you must register it as a 'Doing Business As' (DBA) or trade name.

Trademark: A word, symbol, or other distinctive sign used in commerce indicating exclusive use of a product or service by the owner.

Unemployment Insurance (UI): A state-managed insurance program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Unified Business Identifier (UBI): A nine-digit number used to identify persons engaging in business activities in the state of Washington. This number helps identify a business with the Department of Revenue, the Business Licensing Service, and the Secretary of State. If you have employees, the number is also used in the Department of Employment Security and the Department of Labor & Industries.

Voluntary Dissolution: Voluntary act by the governing persons to dissolve a corporation.

Washington Administrative Code (WAC): Regulations of executive branch agencies issued by the authority of statutes. Like legislation and the Constitution, regulations are a source of primary law in Washington state. The WAC codifies the regulations and arranges them by subject or agency. The online version of the WAC is updated twice a month.

Workers’ Compensation: Insurance you must buy if you have employees. It helps pay if the employee get hurt on the job. In Washington, this is handled by the Department of Labor & Industries (L&I).

Zoning: The legal regulations governing how land can be used in specific geographic areas, including what types of businesses can operate in certain locations.