Washington's Tech Economy and Small Businesses 2026

Washington’s biggest paychecks come from a handful of giant tech and aerospace employers, but its 695,695 small businesses are almost everywhere else. They are 99.5% of the state’s firms and employ about 1.5 million people, 48.7% of its workers.

The SBA reports that “Washington small business employment grew by 20.9 percent between 1998 and 2022, which exceeded the national small business employment growth rate.” In the year to March 2024, small firms added a net 27,671 jobs, more than seven in ten of the state’s net gain. Private employment was essentially flat across 2024, and new business filings hit a record in 2025, though, as below, the record comes with a caveat. What Washington earns, and the unusual way it taxes business, fills out the rest.

Every figure here is drawn from federal agencies and Washington State records, each named in the closing list.

Small Business, Away From the Giants

The SBA’s 2025 Washington profile counts 695,695 small businesses, 99.5% of all the state’s firms, and 533,681 of them, more than three-quarters, are one-person operations with no payroll. That is up 3.5% from 672,472 a year before.

The 162,014 small firms that do have employees are 97.9% of Washington’s employers, with an $87.59 billion payroll, 36.2% of the state total (SUSB 2022).
The firms without payroll booked $32.15 billion in receipts in 2022, and 88.2% of them file as sole proprietors (NES 2022).
The largest small-business fields by number are professional and technical services (113,114), a mark of the state’s consulting and tech base, followed by transportation and warehousing (84,007, almost all owner-operators), real estate (72,832) and construction (62,871).

Where Washington’s Jobs Actually Are

Health care and social assistance employs more people than any other private sector, 471,157, and it also added the most jobs in 2024, up 15,450. Retail is second at 328,479 and accommodation and food third at 283,522, the least-paid big sector at $33,979. Manufacturing follows at 271,058, the aerospace base, and professional and technical services at 253,386, paying $147,551, about half again the private average. One sector pays far more than all of them, and it gets its own section next. Counting every level, government is a large 591,342 jobs, 16.5% of Washington employment. No company is named on this page; the sector cells do the work.

The best-paid sectors are information ($313,103), management of companies ($276,463) and professional and technical services ($147,551).
Utilities ($136,759) and finance and insurance ($134,546) also pay well into six figures.
The weakest pay is in accommodation and food ($33,979) and agriculture ($42,217); even so, the private average statewide is a high $97,041.

A Tech Economy Few Small Firms Touch

The information sector is what sets Washington apart. Its 162,414 jobs pay an average of $313,103, more than three times the private-sector average and higher than any other industry by a wide margin. Software publishing is the core, 82,296 jobs at $324,048, and the streaming and social-platform cell pays the most of anything measured, $709,800 across 14,770 jobs, with cloud hosting another 24,167. Aerospace is the other high-value pillar: parts and product manufacturing runs 80,044 jobs at $134,409, nearly 30% of all Washington manufacturing, and it grew 3.4% in 2024.

Here is the twist, though. Small firms make up only 15% of information employment; the sector is a few very large employers, not a crowd of startups. So the state’s headline wealth is not really a small-business story. Washington’s small firms concentrate instead in construction, professional services, health care and the trades, where the pay is good but nowhere near what the tech towers pay.

The Puget Sound Corridor, and the East

Work in Washington is lopsided toward the Puget Sound. King County, around Seattle, holds 1,271,204 private jobs, about five times the next county and at the highest pay in the state, $137,389; its information cell alone averages $350,208. The rest of the state fills in around it.

Snohomish County, around Everett, is the aerospace county, the only one where manufacturing leads every other private sector, 55,884 jobs at $117,340.
Pierce County (Tacoma) is second by size, and Spokane anchors the east, both health-care-led.
Yakima County is the outlier: agriculture is its number-one private sector, 29,206 jobs in the apple and cherry harvest, the eastern tree-fruit economy.

A Flat Job Year, With a Tech Dip

Private employment barely moved in 2024, essentially flat, but underneath it the sectors pulled in different directions.

Health care added the most, 15,450 jobs, and arts and recreation led on percentage growth, up 4.8%.
Transportation and warehousing gained 4,342, on e-commerce and port work.
The biggest losses were in construction, down 6,533, and information, down 5,139 as the 2024 tech pullback hit.

Information fell fastest of the big sectors in percentage terms, off 3.1%, a reminder that even Washington’s richest industry is not immune to a down year.

A Record for New Filings, With an Asterisk

Washington’s new business applications set a record in 2025, but the headline needs reading carefully. Since the Census reports these monthly and the yearly number just adds the months up, read it as approximate: roughly 69,027 in 2018, a climb through the pandemic, 110,542 in 2024, and 142,196 in 2025, up 28.6% in a year and more than double the 2019 level. The catch is the likely-to-hire subset, the filings that tend to become real employers, which held flat at about 32,000. Most of the 2025 surge, in other words, was in filings unlikely to hire, so the record overstates how many new employer businesses actually formed.

Establishment turnover, meanwhile, ran strongly positive: 24,701 opened against 14,578 that closed in the year to March 2024, a net gain of 10,123. Small firms drove a net 27,671 of the new jobs that year.

Loans Up, and Exports by the Planeload

Federal small-business lending had a strong year and runs in two programs. SBA 7(a) loans, for working capital, jumped 32.1% in count to 1,869 and 14.5% in dollars to $964.7 million, with restaurants taking the most loans and fuel-and-convenience stations the most dollars. The 504 program, for buildings and equipment, added modestly to 106 loans and $129.8 million. King County took the largest share of both.

Exports are where Washington’s scale shows. Identified exporters shipped $55.5 billion in goods abroad in 2023, making Washington an export powerhouse. Nearly nine in ten of those exporters are small businesses, 88.4% of them, but small firms account for just 26.1% of the value, $14.5 billion, because a handful of very large shippers concentrate most of the dollars.

An Urban, Diverse Set of Owners

Women own 46.6% of Washington businesses, a hair above their 45.3% of the workforce, and ownership is overwhelmingly urban, 539,606 urban-owned firms against 88,364 rural, a roughly six-to-one split that reflects the Puget Sound’s pull.

Asian-owned businesses number 88,798, the largest single racial-minority group, a distinctive Puget Sound texture.
Veterans own 6.3% of the businesses, and there are 42,698 Black-owned firms statewide.
As almost everywhere, the great majority of these owners run firms with no employees.

The $895 Billion Economy, Led by Tech

At current prices, Washington’s economy reached $895.0 billion in 2025, up from $856.0 billion in 2024, among the ten largest of any state. With inflation stripped out, real growth ran about 2.2% in 2025 and 4.7% in 2024, on the BEA’s figures.

What makes the mix unusual is the top of it. Its largest sectors by output:

Information, 16.8% of output, the largest single private sector, about three times its share nationally.
Finance, insurance and real estate, 16.5%, then retail, 10.3%.
Professional and technical services, 7.7%, and manufacturing, 7.4%, the aerospace anchor.

What Visitors Spend

State of Washington Tourism put visitor spending at $25.1 billion in 2024, from about 110.8 million visitors drawn to Seattle, the coast, the national parks and the wine country (state-tourism figures, model-based).

For all the software and jetliners at the top, the economy that most Washington small businesses actually live in is the steady one below: caring for people, building, serving customers and moving goods.

No Income Tax, but a Tax on Revenue

Forming an LLC, and the Yearly Report

A Washington LLC files a Certificate of Formation with the Washington Secretary of State, about $180 online, and must name a registered agent with a state address. Where some states then leave you alone, Washington asks for a yearly report, roughly $60, filed by the last day of the LLC’s anniversary month, so the deadline tracks each company rather than a fixed calendar date. Our guide to starting an LLC in Washington walks the filing and the first report in order.

The B&O Tax, and What It Replaces

Washington has no personal income tax and no corporate income tax, which sounds like a bargain until you meet the business and occupation tax. The B&O tax falls on a business’s gross receipts, its total revenue, with no deduction for wages, rent, materials or any other cost, so even a firm losing money owes it. Rates run by activity: about 0.471% for retailing, 0.484% for wholesaling and manufacturing, and 1.5% to 2.1% for services. On top of that, Washington taxes long-term capital gains above roughly $278,000 at 7%, rising to 9.9% on gains over $1 million, and charges a 6.5% state sales tax before local add-ons. The minimum wage is among the highest anywhere, $16.66 in 2025 and $17.13 in 2026, indexed to inflation, and Puget Sound cities set it higher still, up to about $21.65 in Tukwila.

Every Washington LLC must also keep a registered agent in the state. Two of our own guides help from there: one rates the registered agent services in Washington, and another, for owners who would rather not file themselves, ranks the best LLC services in Washington on price and how fast they file.

Washington Tax, Tech and LLC Questions

What is Washington’s B&O tax?

No. Washington is one of a few states with no personal income tax and no corporate income tax. Instead, businesses pay a business and occupation (B&O) tax on their gross receipts, and the state taxes high long-term capital gains at 7% (9.9% above $1 million).

How big is Washington’s tech sector?

Very. The information sector is the largest single private slice of Washington’s economy, about 16.8% of GDP, roughly three times its national share, and the highest-paying, at an average of $313,103. But a few large employers dominate it: small firms are only about 15% of its jobs.

Does a Washington LLC file an annual report?

Yes. Washington LLCs owe the Secretary of State a report every year, roughly $60, due by the end of the month in which the LLC was originally formed. That is different from the handful of states that require no annual report at all.

How many people do Washington’s small businesses employ?

About 1.5 million, 48.7% of the state’s workers, across 695,695 small businesses that make up 99.5% of all Washington firms. Small firms drove more than seven in ten of the state’s net new jobs in the most recent year.

Sources

Firm counts, employment, ownership and export data are from the SBA Office of Advocacy’s 2025 Washington Small Business Profile.
Employment and pay by industry, county and cell for 2024 are Bureau of Labor Statistics Quarterly Census of Employment and Wages figures.
State GDP and its industry composition, in both nominal and real terms, are from the Bureau of Economic Analysis regional accounts.
Business-application counts are the Census Bureau’s Business Formation Statistics, and the nonemployer figures its Nonemployer Statistics.
The 7(a) and 504 loan totals are drawn, by fiscal year, from the SBA’s FOIA loan data.
The B&O tax, capital-gains and sales-tax rates are the Washington Department of Revenue’s; the LLC filing and annual-report rules are the Washington Secretary of State’s, under RCW 25.15; the minimum wage is the Washington Department of Labor and Industries’ rate.
Tourism figures for 2024 are State of Washington Tourism’s.