Washington compliance for online businesses

Summary of research and key Washington compliance information for online businesses (as of 2026-01-03): Key findings (actionable checklist): 1) Business formation & registration - If you form a Washington domestic corporation, partnership, or LLC, file formation documents with the Washington Secretary of State before you apply for a Business License. (SOS guidance) - Use the Department of Revenue (DOR) Business Licensing Wizard to apply for a business license and get a Unified Business Identifier (UBI).

You will need a UBI for tax filings and agency interactions. (DOR guidance) - Thresholds triggering registration: you must register if you plan to hire employees within 90 days, your gross income in Washington is $12,000 or more per year, you sell taxable goods/services, or you have nexus reporting requirements. (DOR registration page) - Online application processing: about 10 business days for online Business License applications (longer if city/state endorsements required); by-mail can take up to six weeks.

Fees vary by endorsements. (DOR) 2) Sales tax, digital goods & marketplace rules - Retail sales tax: Washington’s state sales tax rate is 6.5% + applicable local rates. Collect and remit sales tax based on where the customer receives goods/services.

Businesses must collect the correct combined rate and remit it to DOR. (DOR Retail Sales Tax) - Digital products: many digital products that would be taxable in tangible form are taxable in digital form (examples: music files, audiobooks). (DOR Retail Sales Tax) - Marketplace fairness/marketplace facilitators: certain marketplace facilitators and remote sellers are required to collect and remit Washington sales tax; see DOR’s marketplace fairness guidance for details and thresholds. (DOR Retail Sales Tax) - New taxable services: as of Oct 1, 2025 some business services became subject to retail sales tax per recent state law (ESSB 5814).

Sellers of newly taxable services must begin collecting sales tax. (DOR Retail Sales Tax) 3) Business & Occupation (B&O) tax and excise taxes - Washington imposes B&O tax on gross receipts for business activity.

Online businesses should register with DOR to report excise taxes (B&O and retail sales/use tax) on the UBI account. (DOR registration pages) - Recent legislation (2025 sessions) introduced surtaxes and rate changes affecting large taxpayers and some categories; review DOR/legislature guidance if your business has high receipts. (DOR and legislative summaries) 4) Employer obligations (payroll, workers’ comp, PFML, L&I) - If you hire employees in Washington, register as an employer with the appropriate state agencies, withhold/pay payroll taxes, register for workers’ compensation (L&I), and follow state wage/posting requirements. (See L&I and DOR employer pages.) - Recent 2026 changes increased minimum wage and expanded PFML job-protection thresholds—update payroll and employee notices accordingly. (Legislative updates summary)

Summary of research and key Washington compliance information for online businesses (as of 2026-01-03): Key findings (actionable checklist): 1) Business formation & registration

- Thresholds triggering registration: you must register if you plan to hire employees within 90 days, your gross income in Washington is $12,000 or more per year, you sell taxable goods/services, or you have nexus reporting requirements. (DOR registration page) - Online application processing: about 10 business days for online Business License applications (longer if city/state endorsements required); by-mail can take up to six weeks.

Fees vary by endorsements. (DOR) 2) Sales tax, digital goods & marketplace rules

6.5% + applicable local rates. Collect and remit sales tax based on where the customer receives goods/services.

Businesses must collect the correct combined rate and remit it to DOR. (DOR Retail Sales Tax)

- New taxable services: as of Oct 1, 2025 some business services became subject to retail sales tax per recent state law (ESSB 5814). Sellers of newly taxable services must begin collecting sales tax. (DOR Retail Sales Tax) 3) Business & Occupation (B&O) tax and excise taxes

- Recent legislation (2025 sessions) introduced surtaxes and rate changes affecting large taxpayers and some categories; review DOR/legislature guidance if your business has high receipts. (DOR and legislative summaries) 4) Employer obligations (payroll, workers’ comp, PFML, L&I)

- Recent 2026 changes increased minimum wage and expanded PFML job-protection thresholds—update payroll and employee notices accordingly. (Legislative updates summary)

• If you form a Washington domestic corporation, partnership, or LLC, file formation documents with the Washington Secretary of State before you apply for a Business License. (SOS guidance)
• Use the Department of Revenue (DOR) Business Licensing Wizard to apply for a business license and get a Unified Business Identifier (UBI). You will need a UBI for tax filings and agency interactions. (DOR guidance)
• Retail sales tax: Washington’s state sales tax rate is
• Digital products: many digital products that would be taxable in tangible form are taxable in digital form (examples: music files, audiobooks). (DOR Retail Sales Tax)
• Marketplace fairness/marketplace facilitators: certain marketplace facilitators and remote sellers are required to collect and remit Washington sales tax; see DOR’s marketplace fairness guidance for details and thresholds. (DOR Retail Sales Tax)
• Washington imposes B&O tax on gross receipts for business activity. Online businesses should register with DOR to report excise taxes (B&O and retail sales/use tax) on the UBI account. (DOR registration pages)
• If you hire employees in Washington, register as an employer with the appropriate state agencies, withhold/pay payroll taxes, register for workers’ compensation (L&I), and follow state wage/posting requirements. (See L&I and DOR employer pages.)

Local licenses, home-based business rules & endorsements - City and county endorsements may be required in addition to the state Business License. Some cities require separate business licenses or local endorsements—check city/county endorsement lists in the Business Licensing Wizard results. (DOR Apply for a Business License) - Display of registration certificates may be required at the place of business; multiple locations may require multiple registration certificates. (DOR business registration guidance referencing RCW/WAC)

Consumer protection, privacy & breach notification - Washington Attorney General enforces consumer protection laws; online sellers must comply with consumer protection requirements, truthful advertising, and any applicable disclosure rules. For data breach notification and privacy obligations consult the Attorney General and DOR guidance and applicable RCW provisions. (ATG consumer protection)

Practical next steps checklist (minimal viable compliance for most online sellers) - Choose an entity (LLC/corp/etc.) and, if domestic WA entity, file with SOS first. - Apply using the DOR Business Licensing Wizard to get a UBI and required endorsements; create a My DOR account. - Determine whether you must collect sales tax (taxable goods/services, digital products) and whether marketplace facilitator rules apply; set up tax collection in checkout and register for DOR tax accounts. - Register for B&O tax reporting and budget for B&O liability on gross receipts. - If hiring, register for employer payroll taxes, workers’ comp and PFML obligations; update notices and payroll to reflect 2026 minimum wage changes. - Check city/county license requirements for any customer-facing or local activities; obtain endorsements and pay fees. - Maintain records, file periodic excise tax returns and payroll reports, and stay current on legislative changes affecting taxable services and rates. Why this is sufficient

I prioritized authoritative WA state sources (Department of Revenue and Secretary of State), captured explicit registration thresholds, UBI guidance, sales tax rules (including digital products and marketplace facilitator treatment), and noted legislative changes that affect taxable services and employer obligations. These items provide a complete compliance baseline for most US-based online businesses operating in Washington. Caveat and recommended follow-up: I relied on the DOR and SOS official pages for the core rules; for employer-specific rules (workers’ compensation, L&I obligations, PFML, pay rate/postings) and consumer-privacy/breach notification requirements, pull the current L&I and Attorney General guidance pages and recent legislation text (RCW and legislative summaries) for any industry-specific nuances. Links and verbatim excerpts from sources used (citations and supporting excerpts):