Washington at a glance
Partnership law
RUPA (revised)
LLC default split
Equal per-capita
Operating agreement
Not required
Community property
Yes
Formation cost
$200
Annual cost
$60 annual report fee
Washington has no state income tax but imposes a Business and Occupation (B&O) tax on gross receipts. The state is a community property state, but income from a separately owned business is generally treated as separate property. Washington adopted RULLCA, defaulting to equal per-capita distributions. Seattle is a major tech hub.
Default partnership rules in Washington
Washington adopted RUPA, treating partnerships as separate entities with equal profit sharing by default. Partners have equal management rights and owe fiduciary duties.
The most important takeaway: profits are split equally by default in Washington, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Washington.
LLC defaults in Washington
Washington follows RULLCA, defaulting to equal per-capita distributions among members regardless of capital contributions. An operating agreement is not required. Washington has no state income tax, but imposes a Business and Occupation (B&O) tax on gross receipts. The B&O tax applies to nearly all business activities and is based on revenue, not profit.
Because Washington follows RULLCA with equal per-capita defaults, LLC members should pay special attention to their operating agreement. Without one, a member who contributed 90% of the capital gets the same share of profits as a member who contributed 10%. Use our equity calculator to determine a fair split based on actual contributions.
What happens when a partner leaves in Washington
Under Washington's RUPA, a partner's departure does not dissolve the partnership. The partnership continues, and the departing partner is entitled to a buyout at fair value.
A written partnership agreement should still address departure terms specifically, including how the buyout value is calculated, the payment timeline, and any non-compete provisions. While RUPA provides a default framework, the details of a buyout can still lead to disputes if not spelled out in advance. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Washington
Washington is a community property state. Property acquired during the marriage is community property. However, income from a separately owned business is generally treated as the separate property of the business-owning spouse. A business started before marriage remains separate property, though community property claims can arise if community funds or efforts contributed to the business during the marriage.
While Washington is a community property state, income from a separately owned business is generally treated as separate property. This is more favorable for business owners than states like Texas and Idaho, where business income becomes community property. Still, prenuptial agreements provide additional protection and clarity, especially if the business grows significantly during the marriage.
Formation and cost considerations in Washington
| Formation cost | $200 |
| Annual/recurring cost | $60 annual report fee |
| State income tax | No |
| Partnership law | RUPA (revised) — partnership continues after departure |
| LLC default distributions | Equal per-capita (RULLCA) — all members get equal share |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
Does Washington have a state income tax?
Washington has no state income tax on personal income. However, it imposes a Business and Occupation (B&O) tax on gross receipts, which applies to nearly all business activities. The B&O tax is based on revenue, not profit, so even unprofitable businesses may owe B&O tax.
How does Washington's community property law affect businesses?
Washington is a community property state, but income from a separately owned business is generally treated as separate property. A business started before marriage stays separate, though community property claims can arise if community funds or efforts are used to grow the business.
What is the default LLC profit split in Washington?
Washington follows RULLCA, defaulting to equal per-capita distributions. All members get the same share regardless of contributions unless an operating agreement says otherwise.
How much does a Washington LLC cost?
Washington LLC formation costs $200, and the annual report fee is $60. The B&O tax is an additional ongoing cost based on gross receipts.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Disclaimer: This page provides general information about Washington partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Washington for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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