How to Get a Dealer License in Washington: Bond, Course, and Fees

To get a dealer license in Washington, you need a commercially zoned business location, a $30,000 surety bond, a registered business entity, an eight-hour pre-licensing course (for used vehicle dealers), fingerprints and a background check for every owner, and an application filed through the Department of Revenue’s Business Licensing Service. Budget roughly $1,100 to $1,200 in state fees plus your bond premium, and expect the full process to take several weeks once you factor in entity registration, education, and the mandatory site inspection by the Department of Licensing.

Confirm You Need a License

Washington sets a bright line at five vehicles. If you buy and sell five or more vehicles in any twelve-month period, you need a dealer license. The same applies if you advertise yourself as a dealer, solicit vehicle sales, or distribute vehicles for resale, even before you hit five. Operating without a license is a gross misdemeanor with a fine of up to $5,000 per violation and up to 364 days in jail. A second offense becomes a Class C felony.¹

Selling a few personal vehicles a year usually doesn’t require a license. Regularly buying cars you never intend to drive and flipping them does, whether or not you think of it as a business.

Pick the Right Endorsement

The application asks which type of dealer you plan to be. Most independent used-car sellers want the Motor Vehicle Dealer (retail) endorsement, which lets you sell to the public and to other dealers and automatically includes wholesale privileges. Selling new vehicles additionally requires a franchise agreement with the manufacturer.²

Other endorsements exist for narrower situations: a Motor Vehicle Wholesaler sells only to other licensed dealers; a Manufactured Home/Travel Trailer Dealer handles mobile homes, park trailers, and travel trailers; a Miscellaneous Vehicle Dealer covers off-road vehicles and snowmobiles; and a Vehicle Transporter moves vehicles they don’t own on Washington roads. The steps below focus on the retail motor vehicle path, but the paperwork is nearly identical across categories.

Set Up the Business Location

Location requirements are strict and are what most first-time applicants get wrong. Your dealership must operate from a permanent, enclosed commercial building. A residence doesn’t qualify unless the ground floor is principally used commercially and your office is on that ground floor. A mobile office works only if it’s connected to utilities and set up in compliance with state law.³

The building needs an exterior sign permanently attached to the land or building, showing your business name and the nature of the business (something like “auto sales”) in letters visible from the main road.⁴ You also need a working phone with a number listed in directory assistance; a mobile number is fine as long as it’s listed.⁵

Retail dealers must be open at least five days a week from 10 a.m. to 4 p.m., with those hours posted at the main entrance. All books, records, and files must stay on-site. If you share a building with another dealer, each business’s records, office space, and inventory must be physically separated and clearly identified.⁴

Before you sign a lease, call the local city or county planning department and get zoning verified for vehicle sales. The DOL inspector will check zoning, and finding out too late is expensive. You’ll submit either a property tax statement or your lease agreement as proof of location.⁵

Register the Business and Get a State Business License

Form your business entity with the Washington Secretary of State before you apply. Most independent dealers use an LLC or corporation, and formation can be filed online through the Secretary of State’s Corporations and Charities Filing System.⁶ Keep the Articles of Incorporation or Certificate of Formation on hand; you’ll attach them to the dealer application.

You’ll also apply for a general Washington State business license through the Department of Revenue’s Business Licensing Service at the same time. The dealer endorsement is added on top of that general license.

Complete the Pre-Licensing Course

Used vehicle dealers must finish an eight-hour pre-licensing education course from an approved provider before applying. The Washington State Independent Auto Dealers Association (WSIADA) is one approved provider. The course covers the legal requirements for buying, selling, and trading vehicles in Washington, and you’ll receive a Certificate of Dealer Education to submit with your application.⁷

Some dealers are exempt: franchised recreational vehicle dealers, nationally franchised rental companies, manufactured dwelling dealers, and wholesale auto auction companies. Franchised new motor vehicle dealers are deemed to have met the requirement.⁷

Post a Surety Bond

Every dealer files a surety bond with the DOL before a license is issued. Motor vehicle dealers and manufactured home/travel trailer dealers post $30,000. Miscellaneous vehicle dealers post $5,000. The bond protects consumers: if you violate dealer rules and a buyer suffers a loss, they can claim against the bond.⁸

You don’t pay the full $30,000 upfront. You pay a surety company an annual premium based largely on your credit; applicants with strong credit often pay around 1 to 3 percent of the bond value per year. Get quotes from a surety or insurance provider, and keep the bond active for the full life of your license.

Submit Fingerprints and Background Information

Every owner, officer, director, and anyone holding 10% or more of the business assets must submit fingerprints and a Personal Criminal History Statement. The DOL can deny a license if any of these individuals has been convicted of a crime directly related to the vehicle dealer business within the past ten years, or has had a civil judgment involving fraud or misrepresentation within the past five years. A prior dealer license revocation that was never reissued is also disqualifying.⁹

Assemble the Application Package

Gather everything before you file. Missing documents slow the process considerably.

Business License Application, Form BLS-700-028, filed through the Department of Revenue’s Business Licensing Service¹⁰
Vehicle Dealer/Manufacturer Addendum specifying your endorsement²
Financial/Source of Funds Statement
Certificate of Dealer Education (used vehicle dealers)
Fingerprints and Personal Criminal History Statement for each owner, officer, and member
Articles of Incorporation, Certificate of Formation, or equivalent from the Secretary of State
Property tax statement or lease agreement
Surety bond filed with the DOL

What It Costs

The state fees at initial application are:

Dealer license fee: $975¹¹
Business license processing fee: $19
Dealer plates: $43 per plate
E-Permit: $15 each

The DOL’s published fee schedule may show slightly different totals (for example, about $50.75 per plate) because additional service and filing charges are rolled in.¹² Plan on roughly $1,100 to $1,200 in initial state fees, on top of your bond premium, education course, and location costs.

File the Application and Track Timing

You can file online through the Department of Revenue’s Business Licensing Service portal, which lets you upload documents and pay electronically, or by mail to the Business Licensing Service at PO Box 9034, Olympia, WA 98507-9034, with a check or money order to the Department of Revenue.¹⁰

Online applications are typically processed within ten business days. Paper applications can take up to three weeks. Those figures are administrative processing only. The DOL still needs to review your materials, may ask for more information, and must complete the site inspection before your license is issued.

Pass the Site Inspection

Before final approval, a DOL inspector visits your business location. They check every location requirement: commercial zoning, an enclosed building, exterior signage visible from the main road, posted business hours, a listed phone number, and organized space for records.⁴

Common reasons for a failed inspection include a sign that isn’t visible enough, a phone number that isn’t yet listed in directory assistance, and zoning problems that weren’t cleared up in advance. If you’re using a “doing business as” name, the DOL must approve it first and will reject names that mislead consumers, such as using “wholesale” in the name when you sell mostly retail.

Have everything in place before you submit. Scrambling to install a permanent sign while the inspector is trying to book a visit is how licensing timelines slip by weeks.

After You’re Licensed

Renewal and Continuing Education

Dealer licenses renew annually. The motor vehicle dealer renewal fee is $325.¹¹ Before you renew, you must complete at least five hours of approved continuing education per year. The same categories exempt from pre-licensing education are exempt from continuing education.⁷

Dealer Plates

Once licensed, you can buy dealer plates at $43 each for inventory vehicles and business use. Letting anyone not entitled to use your dealer plates operate a vehicle with them is a gross misdemeanor.¹³ Dealer plates are not personal-use plates for family or friends. Keep a log, and limit use to authorized employees and buyers on test drives.

Records and Bond Maintenance

Keep organized records of every transaction, including purchase and sale documents, titles, and odometer disclosure statements, at your established place of business, available to the DOL during normal hours. Refusing an inspection is grounds for suspension or revocation.⁹ Your surety bond must stay active for the life of the license; a lapse can lead to suspension or revocation. Report ownership changes, officer changes, and address changes to the DOL promptly.

Federal Rules That Also Apply

A state license doesn’t cover federal obligations. If you sell more than five used vehicles in a twelve-month period, the FTC’s Used Car Rule requires a Buyers Guide displayed on every used vehicle, visible from outside, with make, model, year, VIN, and warranty status.¹⁴ Any cash payment over $10,000 on a single transaction, or related payments that together exceed $10,000, must be reported to the IRS on Form 8300 within 15 days of the triggering payment.¹⁵ “Cash” here includes cashier’s checks, money orders, and certain bank drafts, not just currency.

1
Washington State Legislature. RCW 46.70.021 – License Required for Dealers or Manufacturers
2
Washington State Department of Revenue. Instructions for Completing the Vehicle Dealer/Manufacturer Addendum
3
Washington State Legislature. Chapter 46.70 RCW Dealers and Manufacturers – Section 46.70.023
4
Washington State Department of Licensing. Dealer Checklist
5
Washington State Department of Licensing. Get Your License Vehicle Dealers
6
WA Secretary of State. Start or Register a Business
7
Washington State Legislature. RCW 46.70.079 – Education Requirements
8
Washington State Legislature. RCW 46.70.070 – Dealers Bond Required Exceptions
9
Washington State Legislature. RCW 46.70.101 – Denial Suspension or Revocation of Licenses
10
Washington Department of Revenue. Business License Application Form BLS 700 028
11
Washington State Legislature. RCW 46.70.061 – Fees Disposition
12
Washington State Department of Licensing. Fees Vehicle and Boat Dealers
13
Washington State Legislature. RCW 46.70.140 – Handling Hot Vehicles Unreported Motor Vehicles
14
Federal Trade Commission. Dealer’s Guide to the Used Car Rule
15
Internal Revenue Service. Report of Cash Payments Over $10,000 Received in a Trade or Business – Motor Vehicle Dealership QAs