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City Business Licenses and Fees

This page provides a basic overview of local business licenses and fees for cities and towns in Washington State, including legal authority, general business licenses and "model ordinance" requirements, regulatory licenses, and revenue-generating licenses sometimes referred to as "head taxes."

For information on business and occupation (B&O) taxes, see our page City Business and Occupation Taxes.


Overview

Most individuals or companies that conduct business in Washington State must obtain a state business license from the Business Licensing Service.

In addition, most cities also require a separate business license in order to legally conduct business within their jurisdiction. For cities, business licenses can serve several different functions, including monitoring business activities operating within the city’s jurisdiction, regulating certain types of business activities to ensure public safety and code compliance, and generating revenue.

Businesses that operate in multiple jurisdictions need to obtain licenses from each of these individual jurisdictions. Businesses have complained that this process is too burdensome, so in 2017 the state legislature adopted EHB 2005 to address their concerns and simplify the administration of municipal general business licenses. Below is a discussion of key considerations for local governments that adopt or have adopted general business licensing requirements within their jurisdiction.


Summary of EHB 2005 Deadlines

EHB 2005, codified in chapter 35.90 RCW, has created several changes to city business licensing requirements, as explained further on this page. These changes require cities to take specific actions by certain dates within a limited timeline. Here is a list of significant deadlines:

  • October 17, 2018: Deadline for current BLS partner cities to adopt the new model business license provisions.
  • January 1, 2019: Deadline for all other cities with a general business license requirement to adopt the new model business license provisions.
  • July 1, 2020: Deadline for cities to partner with FileLocal. Any city that does not partner with FileLocal by this time will only be able to partner with BLS.
  • December 31, 2022: Deadline for all cities that did not partner with FileLocal to partner with BLS. Cities will be gradually brought onboard by BLS beginning in 2018.

You can read more about these requirements below. For questions or more information on the process that culminated in these provisions, please contact Andrew Pittelkau or Sheila Gall at the Association of Washington Cities (AWC), or you may also Ask MRSC.


Legal Authority

The general authority for cities to impose business licenses, fees, and regulations can be found in:

  • RCW 35.22.280(32) – First class cities may "grant licenses for any lawful purpose, to fix by ordinance the amount to be paid therefor, and to provide for revoking the same…"
  • RCW 35.23.440(8) – Second class cities may "fix and collect a license tax for the purposes of revenue and regulation, upon all occupations and trades, and all and every kind of business authorized by law…"
  • RCW 35.27.370(9) – Towns may "license, for the purposes of regulation and revenue, all and every kind of business, authorized by law and transacted and carried on in such town…"
  • RCW 35A.82.020Code cities may "exercise the authority authorized by general law for any class of city to license and revoke the same for cause, to regulate, make inspections and to impose excises for regulation or revenue in regard to all places and kinds of business, production, commerce, entertainment, exhibition, and upon all occupations, trades and professions and any other lawful activity…"

General Business Licenses and Model Ordinance

RCW 35.90.010(4) defines a "general business license" as "a license, not including a regulatory license or a temporary license, that a city requires all or most businesses to obtain to conduct business within that city."

Any city or town may require a general business license for any person or company "engaging in business" within city limits. This includes businesses that are physically located within the city, as well as businesses that are physically located elsewhere but engage in business within the city. However, cities may not require licenses for entities that are not "engaging in business" within the jurisdiction (RCW 35.90.060).

Many cities charge a flat or tiered fee for general business licenses. These fees are generally designed to recover the administrative costs of registering the businesses, such as issuing the licenses and maintaining the files. The fees charged should be fair and bear a reasonable relation to the costs.

Chapter 35.90 RCW requires all cities and towns with general business licensing requirements to adopt a uniform "model ordinance" identifying what types of commercial activity are and are not subject to business licensing requirements. The provisions of the model ordinance only address general business licensing; they do not address temporary licenses (such as seasonal businesses or special event permits), regulatory licenses (see below), or local business and occupation (B&O) taxes.

However, it should be noted that this is not a comprehensive model ordinance – rather, it consists of just two provisions that must be incorporated into the rest of the city’s business licensing regulations.

The required provisions of the model ordinance were drafted by a committee through the Association of Washington Cities (AWC) and released in June 2018. The committee was comprised of representatives from cities that impose general business license requirements, with input from state and local business associations and chambers of commerce.

The model ordinance has two required components:

  • Cities and towns may only impose licensing requirements upon individuals or companies "engaging in business within the city," as defined in the model ordinance. The ordinance also sets forth examples of activities that are considered "engaging in business," as well as business activities that do not require licensing. The definition is based on the model ordinance for B&O taxes.
  • For businesses that engage in business within the city but are not physically located within the city, the ordinance establishes a minimum dollar threshold below which the businesses must be partially or fully exempted from licensing requirements. The minimum threshold of business activity in the ordinance is $2,000, although cities may adopt a higher threshold if desired. Below this threshold, cities must either:
    • Exempt these businesses from the licensing requirements entirely, or
    • Require licensing, but at no cost to the businesses.

See the complete text of the model ordinance for the exact language. The model ordinance may not be amended more frequently than once every four years, unless changes are required to comply with new state legislation or court decisions.

For examples of how cities and towns have incorporated the model language into their codes, see the examples ordinances further down on the page.

Current BLS partner cities must adopt the language from the model ordinance by October 17, 2018 (RCW 35.90.070) and provide notification to BLS in order to maintain its business licensing program on January 1, 2019. The statute requires that notice be received by BLS a minimum of 75 days prior to effective date for "all changes that affect in any way who must obtain a license, who is exempt from obtaining a license, or the amount or method of determining any fee for the issuance or renewal of the license." Both provisions of the model ordinance will require the 75 day notification to BLS.

All other cities and towns with general business licensing requirements must adopt the language from the model ordinance by January 1, 2019 (RCW 35.90.090).

Any city or town that does not adopt the model ordinance by the deadline is prohibited from enforcing its general business licensing requirements until it adopts the model ordinance provisions.

Aside from the model ordinance provisions, cities and towns may adopt any other business license provisions as they see fit, including, but not limited to:

  • Fees and thresholds (provided that they comply with the model ordinance)
  • Approval process and conditions
  • License terms and expiration dates
  • Penalties
  • Suspension, revocation, and appeals
  • Exemptions (again, provided that they comply with the model ordinance)

Business License Exemptions

Some cities have chosen to exempt certain business types from general business licensing requirements entirely, or else to require a business license but to charge no fee for the license. Examples include, but are not limited to:

  • Nonprofit and religious organizations
  • Minors engaged in babysitting, newspaper delivery, lemonade stands, lawn mowing, and similar activities
  • Private ambulance operators
  • Common carrier delivery of goods and services
  • Farmers selling their own produce
  • Businesses below a certain income threshold
  • Businesses that only do casual or isolated sales

However, these individuals and businesses may still be subject to state business licensing requirements.

In addition, for out-of-town businesses that engage in business within the city below a minimum threshold as discussed above, EHB 2005 requires cities to exempt those businesses from the business licensing and/or business license fees, as discussed earlier.


Business Licensing Portals: BLS and FileLocal

Many cities currently issue their own business licenses directly. However, there are also two "one-stop" licensing portals that serve multiple jurisdictions: the Business Licensing Service (BLS, part of the state Department of Revenue) and FileLocal (created by an interlocal agreement between several larger cities in the Puget Sound region).

In an attempt to streamline the licensing process for businesses that operate in more than one city, chapter 35.90 RCW requires all cities to partner with BLS or FileLocal over the next few years. Once this legislation is fully implemented, businesses will be able to obtain local business licenses for any city in the state through BLS and/or FileLocal.

The deadline for partnering with FileLocal is July 1, 2020 – meaning that businesses must be able to use FileLocal to renew or apply for their business license in your jurisdiction by that date. All other cities are being gradually brought onboard with BLS between January 1, 2018 and December 31, 2022, in conjunction with the BLS Local Business Licensing Partnership Plan. (The 2027 deadline was moved up to 2022 when the legislature appropriated additional funding to BLS in the 2018 Supplemental Budget ESSB 6032, Section 135.)

However, cities will still retain the ability to set their own business license fees and thresholds with BLS or FileLocal.


Regulatory Business Licenses

Some cities also impose additional regulatory licenses and fees upon certain classes of business that, in their analysis, require additional regulation and oversight for code enforcement or public safety purposes.

RCW 35.90.010(6) defines a "regulatory business license" as "a license, other than a general business license, required for certain types of businesses that a city has determined warrants additional regulation…"

Examples of business types that some cities have chosen to impose regulatory business license requirements upon include, but are not limited to:

  • Adult entertainment
  • Amusement device operators
  • Debt collectors
  • Door-to-door salespersons
  • Fireworks stands
  • Heavy manufacturing
  • Home-based businesses
  • Live entertainment
  • Marijuana-related businesses
  • Massage parlors
  • Mobile food vendors
  • Private ambulance services
  • Short-term rentals
  • Taxicab and other for-hire vehicle operators
  • Towing companies
  • Trade show operators

Revenue-Generating Licenses and Head Taxes

Some cities raise revenue by charging business license fees on a sliding scale based on criteria such as number of employees or number of employee hours worked (sometimes known as a "head tax") or the square footage of the business. See the examples later on this page.


Examples of EHB 2005 Business License Ordinances

​As noted earlier, cities and towns must update their general business license ordinances to include the model provisions by October 17, 2018 for current BLS partner cities and by January 1, 2019 for all other cities. As cities and towns begin adopting new ordinances, we will post a few examples here.

If and when your jurisdiction adopts the model ordinance provisions, please consider sending a copy of your ordinance to our librarian Gabrielle Nicas.

  • Bonney Lake Ordinance No. 1602 (2018) – Exempts out-of-town businesses below $2,000 threshold
  • College Place Ordinance No. 18-022 (2018) – Requires no-cost licenses for out-of-town businesses under $2,000 threshold
  • East Wenatchee Ordinance No. 2018-09 (2018) – Updates general business license requirements to include EHB 2005 model ordinance language (slightly modified). Current BLS partner city; requires registration for out-of-town businesses under $2,000 but establishes a $0 fee.
  • Gold Bar Ordinance No. 717 (2018) – Simple and straightforward ordinance; requires registration at no cost for out-of-town businesses under $2,000 threshold
  • Issaquah Ordinance No. 2843 (2018) – Requires no-cost licenses for out-ot-town businesses with $3,000 or less in business activity; also updates requirements for businesses that contract with the city.
  • Kirkland Ordinance No. O-4648 (2018) – Updates general business license and revenue-generating license (head tax) requirements to comply with EHB 2005. Assigns BLS to manage business licensing, exempts out-of-city businesses with activity under $12,000, and makes other changes in addition to model ordinance language.
  • SeaTac Ordinance No. 18-1032 (2018) – Requires no-cost licenses for out-of-town businesses below $2,000 threshold and makes other adjustments to business license requirements
  • Shoreline Ordinance No. 831 (2018) – Exempts all businesses below $2,000 threshold, including businesses with a physical location within the city.
  • Tukwila Ordinance No. 2588 (2018) – Requires no-cost licenses for out-of-town businesses below $2,000 threshold. License fees depend on number of employees; establishes minimum fee for businesses with no employees located physically within the city.

Examples of Business License Fee Schedules

Below are selected examples of business license fee schedules, reflecting a range of different approaches and policy choices. Please note that these examples may not yet reflect the "model ordinance" requirements discussed earlier.

Fee Comparisons

General and Regulatory Business Licenses

  • Arlington Business Licenses – Separate fees for city business licenses and out-of-city business licenses; city business licenses are prorated on a quarterly basis
  • Bainbridge Island Ordinance No. 2018-21 (2018) – Updating municipal code references in accordance with BLS business license system requirements; includes section on marijuana businesses.
  • College Place Who Needs a License? – All business located within the city must have a license, but there is no fee; out-of-town businesses do not require a license
  • Granger Business License – Flat fee for general business licenses; fee for renewals is half of the fee for new business licenses
  • Longview Business Licenses – Flat fee for general business licenses; also includes "specialty" (regulatory) licenses and temporary licenses that are valid for 90 days
  • Millwood Who Needs a License? – Minimal fee for businesses located within the city; no license required for businesses outside the city
  • Renton Commercial Business License – Flat fee; 50% prorated fee for businesses starting operations after July 1
  • Tacoma Business License Fees – Three tiers based on annual gross income of the business; also includes various regulatory license fees

Revenue-Generating Business Licenses


Last Modified: October 22, 2018