The Evergreen State has a tradition of fostering as well as helping build some of the largest organizations in the world, including Boeing, Amazon, Microsoft, Costco, and Starbucks. Today, there are approximately 250,000 companies headquartered in Washington or have based their operations here. Although, the state may be famous for its apples, airplanes, and wine, there are several other industries growing and expanding in the state right from mining to manufacturing, maritime trade, and life sciences. The real gross domestic product (GDP) of the state was $439.41 billion in 2017, which is good growth jump from $355.2 billion in 2010. Some of the most recognized brands, Startup Company Washington, and innovative companies choose the evergreen state as their base of operations today.
Drivers of Business Growth for Start-ups
What makes Washington a great state of start-ups? The most important reason is that the state has a positive business climate that is driven by steady stream of highly qualified workforce, Culture of innovation and creativity, robust supply chain, being equidistant from Europe and Asia makes it a Centralized Export Hub, and then there is low-cost energy and a stable-scalable grid. Apart from this, if you register a new company in Washington, you can take advantage of a variety of business incentives offered by state and local agencies. Let’s take a look at some of the advantages of these two business entities:
Advantage#1: The benefits of Incorporation or LLC formation
C or S Corporation
- Miscellaneous Incentive Programs: If you register a new company in Washington then you will be able to benefit from the variety of incentive programs and this includes:
– B&O Tax/Public utility tax credit for electricity, natural gas, or manufactured gas sold to silicon smelters: The credit is for businesses that sell natural gas, electricity, or manufactured gas to silicon smelters in the state.
– Washington filmworks contributors B&O tax credit: It was earlier known as the motion picture competitiveness program and you can claim credit on contributions made to Washington Filmworks.
– International services – B&O tax credit for new employment: A startup company Washington can claim credits worth $3,000 per year for each qualified employment position created in international services like data processing, computers, legal, information, accounting and tax preparation, business management, and advertising among others. More Information
– Sales/Use tax exemption on rental of production equipment and purchase of production services for motion picture and video production
- Independent life: When you register a new business in Washington as an S Corporation, it will enjoy an independent life. This means that the incapacity or death of a stockholder will not have a negative impact on the business operations.
Limited Liability Company
- Sales and Use Tax Exemption: If you register a new business in Washington then it can be eligible for several types of sales and use tax exemption including:
– Sales & use tax exemption for aerospace businesses focusing on computer software/hardware/peripherals: The exemption is available to certificated FAR repair stations, manufacturers of component parts of commercial airplanes, and aerospace tooling manufacturers among others. More information on Aerospace Manufacturers Tax Incentives.
– Retail sales and use tax exemption for the construction of new facilities used for manufacturing commercial airplanes, fuselages or wings of commercial airplanes
– Brokered natural gas use tax exemption: This exemption is applicable for those startup company Washington who manufacture aluminum in the state.
– Property/Leasehold tax exemption for manufacturers of biodiesel/alcohol fuel, etc.: The exemption is available to manufacturers of biodiesel fuel, alcohol fuel, wood biomass fuel, or biodiesel feedstock.
– Sales/Use tax exemption for livestock nutrient management equipment & facilities
– Sales/Use tax exemption for replacement parts for farm machinery & equipment
- Flexible Profit Distribution: A startup company Washington LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.
Advantage#2: Washington Business Incentives
Once you register a new company in Washington, there are several business incentives and programs that your business entity can benefit from. Let’s take a look at some of the most popular programs:
- Washington Foreign Trade Zone (FTZ): If your startup company Washington focuses on importing components and parts for distribution or manufacturing finished products for exports then the Foreign Trade Zone (FTZ) is where your business needs to be located. Your business will not only benefit from the tremendous competitive advantage but there are other advantages as well. Since, the FTZ is not considered to be inside the U.S. Customs Territory, merchandise and components are exempted from duty payments and can be shipped in or out of the Washington FTZ. There are 12 FTZ’s across Washington including Seattle, Tacoma, Grays Harbor, Spokane, and Vancouver among others. FTZ Manual
- Washington Opportunity Zone (OZ) Program: The salient aspect of the Washington Opportunity Zone (OZ) Program is that investors or businesses will be able to defer paying their taxes on capital gains that have been invested in Qualified Opportunity Funds and these funds are in turn invested in distressed communities that have been designated as Opportunity Zones. The tax deferral can be for a period of up to nine years. There are 139 census tracts in Washington. List of Qualified Opportunity Zones
Are there any Disadvantages of Incorporating in Washington?
What disadvantages could possibly be there for a startup company Washington? In reality there is none except a few that are common to different types of businesses like processing of incorporation can be time consuming and corporations would require more paperwork while LLC formation has the disadvantage of limited life. These are small disadvantages as compared to the many incentives the Evergreen State has to offer.