If you live and work in Washington state, forming a new business isn't that complicated. Fortunately. Nevertheless you do need to walk through several steps in the right order to minimize problems later on:
Step #1 Verify You're Starting a Business
A simple first step? Confirm that you're truly starting a new small business. If you will be performing services (like physician or engineer does) or if you're selling products (like a retailer or restaurant does), absolutely, you've started or will start a business.
However, some activities don't rise to the threshold of a business. For example, investing in real estate is not a business. And researching investments (including businesses you might start) isn't really a business either.
Step #2 Identify the Business Owner
Identifying the person who's really starting and will own the business is another important step. But this step is more problematic that you might guess at first. As one obvious option, you of course might start a new business as sole proprietorship.
But you have other options for business ownership, too. In Washington state, for example, you can easily form a limited liability company and then have the limited liability company own and operate the business. (This often gives you some liability protection while keeping your taxes and accounting pretty simple.)
You can also form a corporation and then have the corporation own and operate the business. Corporations complicate your accounting and taxes which is an extra burden for a small business. But corporations often save the owners taxes.
Note: To use a limited liability company or corporation for a business, you typically form the LLC or corporate entity early in the setup process.
Step #3 Obtain Needed Business Licenses
The state of Washington and most municipal governments mandate that businesses apply for a business license. Businesses apply for a state master business license, for example, by contacting the Washington State Department of Licensing. Most (and maybe all) cities require local business licenses, too, that you can learn about by contacting the local city hall offices.
Note: Business licenses give the state and your local city government a way to identify businesses they can tax. Accordingly, government officials are usually pretty serious about making sure that people comply with the licensing laws.
Three business "licensing" cautions can be issued at this point: First, be sure that the right entity gets the business license. If you have an LLC own and operate a business, for example, then the LLC is the entity that needs to get the business license.
A second caution about business licensing: Note that if you operate in multiple cities, you'll probably need city business licenses from than one municipality. For example, if you're a Seattle law firm that regularly visits and works with Bellevue clients, you may need both a Seattle and Bellevue license.
And a third and final caution: Some professions require professional licenses in addition to the business license the firm needs from the Washington state department of licensing. If you happen to operate in a profession (medicine or the practice of law, for example), therefore, consult the appropriate state regulatory agency to determine any professional licensing requirements.