Washington compliance consumer tax awareness support

Washington state has a unique tax structure, notably lacking a personal or corporate income tax. However, businesses are subject to other state excise taxes, making compliance crucial for LLC founders and business owners.

For any entity other than a sole proprietorship, registration begins with the Washington Secretary of State by filing a Certificate of Formation for domestic LLCs or a Foreign Registration for out-of-state LLCs.

Subsequently, businesses must register with the Department of Revenue to obtain a Unified Business Identifier (UBI) account and tax registration. Online registration is available via the Department of Revenue's Open Business portal at dor.wa.gov/open-business.

LLCs are also required to file annual reports with the Secretary of State to maintain good standing. Most Washington businesses are subject to three primary state excise taxes: Business & Occupation (B&O) tax, retail sales tax, and use tax.

The B&O tax is a gross-receipts tax on business activities and is generally not collected as a separate line item from customers. Retail sales tax is collected on the retail sale of goods and certain services.

Use tax applies when sales tax was not paid on purchases, such as out-of-state items brought into Washington. Businesses must report use tax on their excise tax return, while individuals file a consumer use tax return.

The Department of Revenue offers guidance on over 50 B&O classifications and provides industry guides to help businesses choose the correct classification(s). After registration, a filing frequency (monthly, quarterly, or annual) is assigned based on estimated gross receipts.

Monthly returns are due on the 25th of the month following the reporting period. Quarterly returns are due on the last day of the month following the reporting period.

Annual returns are due April 15th of the year following the reporting period. Electronic filing is mandatory.

Businesses with employees must generally register for unemployment insurance with the Washington Employment Security Department. Other employer obligations include Industrial Insurance (L&I), withholding, and Paid Family & Medical Leave (PFML).

The Department of Revenue's guides refer to ESD and L&I as essential contacts for these matters. Businesses should inform customers about when sales tax is collected at the point of sale versus when the customer is responsible for use tax (e.g., for out-of-state or internet purchases where sales tax wasn't collected).

Simple messaging on invoices or websites can advise customers that state use tax may be due to Washington and how to remit it. Businesses making out-of-state or online purchases for their own use must report use tax on their excise tax return.

Businesses that resell goods must obtain and maintain reseller permits. Vendors should verify reseller permits using the Business Lookup or Reseller Permit Verification Service and keep proper documentation.

Business records, including invoices and supporting documentation for exemptions/deductions, must be retained for at least five years. Marketplace facilitators may be required to collect and remit Washington sales tax on behalf of sellers, and documentation of this arrangement should be kept.

Late filing and late payment penalties and interest apply. The Department of Revenue provides guidance on penalties, audit processes, appeals, and how to request written rulings.

Key tools and resources include My DOR (for electronic filing), Tax Rate Lookup, Business Lookup, and the Reseller Permit Verification Service. Contact information for the Department of Revenue (360-705-6705; Live Chat via dor.wa.gov/contact), Secretary of State (360-725-0377), and ESD employer pages are also available.

Washington state has a unique tax structure, notably lacking a personal or corporate income tax. However, businesses are subject to other state excise taxes, making compliance crucial for LLC founders and business owners.

For any entity other than a sole proprietorship, registration begins with the Washington Secretary of State by filing a Certificate of Formation for domestic LLCs or a Foreign Registration for out-of-state LLCs.

Subsequently, businesses must register with the Department of Revenue to obtain a Unified Business Identifier (UBI) account and tax registration. Online registration is available via the Department of Revenue's Open Business portal at dor.wa.gov/open-business.

LLCs are also required to file annual reports with the Secretary of State to maintain good standing. Most Washington businesses are subject to three primary state excise taxes: Business & Occupation (B&O) tax, retail sales tax, and use tax.

The B&O tax is a gross-receipts tax on business activities and is generally not collected as a separate line item from customers. Retail sales tax is collected on the retail sale of goods and certain services.

Use tax applies when sales tax was not paid on purchases, such as out-of-state items brought into Washington. Businesses must report use tax on their excise tax return, while individuals file a consumer use tax return.

The Department of Revenue offers guidance on over 50 B&O classifications and provides industry guides to help businesses choose the correct classification(s). After registration, a filing frequency (monthly, quarterly, or annual) is assigned based on estimated gross receipts.

Monthly returns are due on the 25th of the month following the reporting period. Quarterly returns are due on the last day of the month following the reporting period.

Annual returns are due April 15th of the year following the reporting period. Electronic filing is mandatory.

Businesses with employees must generally register for unemployment insurance with the Washington Employment Security Department. Other employer obligations include Industrial Insurance (L&I), withholding, and Paid Family & Medical Leave (PFML).

The Department of Revenue's guides refer to ESD and L&I as essential contacts for these matters. Businesses should inform customers about when sales tax is collected at the point of sale versus when the customer is responsible for use tax (e.g., for out-of-state or internet purchases where sales tax wasn't collected).

Simple messaging on invoices or websites can advise customers that state use tax may be due to Washington and how to remit it. Businesses making out-of-state or online purchases for their own use must report use tax on their excise tax return.

Businesses that resell goods must obtain and maintain reseller permits. Vendors should verify reseller permits using the Business Lookup or Reseller Permit Verification Service and keep proper documentation.

Business records, including invoices and supporting documentation for exemptions/deductions, must be retained for at least five years. Marketplace facilitators may be required to collect and remit Washington sales tax on behalf of sellers, and documentation of this arrangement should be kept.

Late filing and late payment penalties and interest apply. The Department of Revenue provides guidance on penalties, audit processes, appeals, and how to request written rulings.

Key tools and resources include My DOR (for electronic filing), Tax Rate Lookup, Business Lookup, and the Reseller Permit Verification Service. Contact information for the Department of Revenue (360-705-6705; Live Chat via dor.wa.gov/contact), Secretary of State (360-725-0377), and ESD employer pages are also available.