Washington compliance for global consulting teams

Final deliverables: comprehensive blog post and newsletter copy on “Washington compliance for global consulting teams,” plus practical checklist and resources. Blog post (full): Title: Washington compliance for global consulting teams Excerpt: Essential compliance guidance for US business owners and LLC founders who run global consulting teams and serve Washington clients or employ Washington-based workers.

Intro If your consulting firm (US-based or foreign) sells services to Washington clients, or has workers performing work from Washington, you must consider state rules that can create tax, registration and employment obligations even without a physical office.

This guide explains the key Washington requirements, thresholds, practical steps, and common pitfalls. 1) Does Washington apply to you? - Economic nexus: If your gross receipts from Washington customers exceed $100,000 in the current or prior year, you must register to report Business & Occupation (B&O) tax and collect applicable sales tax. - Physical presence: Having employees, contractors, inventory, or other business activities in Washington generally creates immediate nexus. - Organized or commercially domiciled in Washington: If your business is based in WA or commercially domiciled there, additional obligations apply.

Final deliverables: comprehensive blog post and newsletter copy on “Washington compliance for global consulting teams,” plus practical checklist and resources. Blog post (full): Title: Washington compliance for global consulting teams Excerpt: Essential compliance guidance for US business owners and LLC founders who run global consulting teams and serve Washington clients or employ Washington-based workers.

Intro If your consulting firm (US-based or foreign) sells services to Washington clients, or has workers performing work from Washington, you must consider state rules that can create tax, registration and employment obligations even without a physical office.

This guide explains the key Washington requirements, thresholds, practical steps, and common pitfalls. 1) Does Washington apply to you? - Economic nexus: If your gross receipts from Washington customers exceed $100,000 in the current or prior year, you must register to report Business & Occupation (B&O) tax and collect applicable sales tax.

• Physical presence: Having employees, contractors, inventory, or other business activities in Washington generally creates immediate nexus.
• Organized or commercially domiciled in Washington: If your business is based in WA or commercially domiciled there, additional obligations apply.

Registering and the Unified Business Identifier (UBI) - Register through Washington’s Business License Application to get a UBI and register with the Department of Revenue and related agencies. Registration triggers tax reporting and often local licensing requirements.

Business & Occupation (B&O) tax — gross receipts tax - Washington levies a gross receipts B&O tax (no corporate income tax). Different activities have different rates. For many consulting/service activities, recent B&O classification guidance shows

- Service & Other Activities: 1.50% (for some tiers) and a higher tier at 1.75% for larger groups (see state guidance for exact rates and tiers). - Filing thresholds: Businesses generally must file B&O returns if annual B&O gross receipts meet or exceed filing thresholds (for many businesses the threshold for filing returns was increased to $125,000 per year effective Jan 1, 2023). - B&O tax is on gross receipts—no deduction for expenses—so budget accordingly. 4) Sales and use tax for consulting services - Washington’s sales tax rules have expanded to capture many digital and professional services. If a service you provide is taxable or you have economic nexus ($100k), you may need to collect/remit sales tax. Review service definitions and sourcing rules carefully to determine taxability. - Bundled services: taxable and non-taxable components can create collection obligations; itemized billing and careful classification are important. 5) Employment obligations when you have workers in Washington - Unemployment insurance: Register with the Employment Security Department (ESD) if you employ workers in WA, and you meet the wage/employee thresholds for UI coverage. - Workers’ compensation: Washington’s Department of Labor & Industries requires coverage for most employees; check coverage requirements and classifications for remote workers. - Paid Family & Medical Leave (PFML): Employers must report wages and remit premiums to the state each quarter and notify employees about the program. Employers of all sizes have reporting responsibilities; small employers may have different contribution rules or voluntary plan options. - I-9 and federal compliance: You must verify employment eligibility for employees; remote international hires must be legally authorized to work for a U.S. employer. - Withholding: Washington has no state personal income tax, so no state income tax withholding; but federal payroll taxes and withholding still apply for employees. For foreign contractors, follow federal withholding rules (Forms W-8, 1042) and consult tax counsel for treaty and withholding issues.

Independent contractors vs employees - Washington agencies (L&I, ESD) look at facts and may treat remote or client-facing individuals as employees for insurance and tax purposes. Classification risk is elevated with control over work, direction, or integration into your business. Maintain written agreements, invoices, and clear contractor independence where appropriate.

Foreign businesses and permanent establishment /PE risks - Foreign consulting firms that cross the $100k threshold or have Washington workers may trigger state registration and B&O/sales tax obligations even without a physical U.S. office. - Separate US federal permanent establishment and international tax treaty issues may arise; consult an international tax advisor about U.S. source income and PE risk. 8) Voluntary disclosure and amnesty programs - Washington’s Department of Revenue has offered voluntary disclosure windows for international remote sellers (e.g., a temporary program announced for early 2026 in some guidance). If you have unregistered prior activity, voluntary disclosure may limit lookback and penalties—get professional help promptly. 9) Practical compliance checklist (step-by-step) - Step 1

Identify Washington revenue in the current and prior year. If >$100k, register with WA Department of Revenue. - Step 2: Register through Business License Application to receive UBI; set up My DOR Portal account. - Step 3: Determine whether your services are taxable and whether you must collect sales tax; update billing systems. - Step 4: Review B&O classification for each revenue stream; estimate gross receipts tax liability and filing frequency. - Step 5: If you have workers in Washington (even one), register with ESD (unemployment), L&I (workers’ comp), and Paid Leave (PFML); set up reporting and payroll processes. - Step 6: Review contractor classification, written agreements, and withholding documentation for foreign contractors. - Step 7: If previously unregistered and you discover tax exposure, consider voluntary disclosure programs to minimize lookback/penalties. - Step 8: Maintain records (DOR recommends 5 years for tax records) and monitor Washington guidance for changes.

Common pitfalls - Assuming no physical presence means no obligations — remote employees or single large contracts can create nexus. - Misclassifying taxable services or bundling items incorrectly and failing to collect sales tax. - Underestimating B&O tax impact because it’s applied to gross receipts. - Failing to register for PFML, unemployment insurance, and workers’ comp for Washington-based workers.

Recommended next steps and resources - Immediate

run a quick revenue test (Did you earn >$100k from WA?) and a people test (Any employees/contractors performing work from WA?). - If yes to either, register with My DOR Portal and the Business Licensing Service to get your UBI and start reporting. - Talk to a WA state tax advisor or employment counsel about B&O classification, service taxability, and payroll registrations. - Consider remote hiring solutions such as an Employer of Record (EOR) or PEO if you onboard Washington-based workers temporarily and want to shift administrative burden.