Washington compliance for small accounting firms

Research steps and summary: Steps taken and sources searched - Queried Washington State Board of Accountancy (ACB) pages for firm licensing, firm registration, ownership rules, CPE and Quality Assurance Review (QAR) obligations (ACB firm-licensing and CPA firm registration pages).- Queried Washington State business resources (Business Licensing Service / business.wa.gov) and Department of Revenue (DOR) guidance for business licensing, B&O tax and electronic filing requirements.- Retrieved Washington administrative rules (WAC chapter 4-30) for Public Accountancy covering firm organization, ownership, ethics, CPE, QAR and discipline.- Retrieved Washington Employment Security Department (ESD) guidance on unemployment coverage for corporate officers (voluntary election), and Washington Department of Labor & Industries (L&I) guidance for workers’ compensation account setup and owner coverage.- Retrieved IRS guidance for PTIN requirements for tax return preparers.

Analysis and key findings (state-specific compliance checklist for small accounting firms in Washington) 1) Washington Board of Accountancy (ACB) — CPA firm licensing and registration - Firm license required: Any firm with an office in Washington performing or offering to perform attest services (and compilation services as defined by statute) must hold a Washington CPA firm license.

Out-of-state firms without a Washington office generally do not need a Washington firm license but must meet practice-privilege/mobility requirements if offering services in WA. (See ACB firm-licensing/firm-licensing-requirements and CPA firm registration pages.)- Firm application/renewal: Firms apply via SecureAccess Washington, complete the online application, and pay applicable fees.

The ACB provides resources (laws, rules and policies) and links to RCW/WAC cited in the rules.- Ownership & organization: CPA firms may organize as sole proprietorships, partnerships, corporations, professional corporations, LLCs, LLPs, or other authorized entities.

A simple majority of financial interest and voting rights must be held by licensees (or holders of valid CPA licenses in other states) and resident non-licensee owners must register with the Board.- Practice privileges / mobility: Out-of-state firms or CPAs using practice privileges must consent to the board’s discipline authority and comply with Washington rules.- Continuing competency and QAR: WAC 4-30 includes continuing professional education (CPE) requirements and Quality Assurance Review (QAR) requirements for licensed CPA firms; the rules cover qualifying CPE activities, reporting periods and documentation and QAR obligations.

WAC also addresses confidentiality, ethics, compliance with standards, client records and discipline authority.

Research steps and summary: Steps taken and sources searched - Queried Washington State Board of Accountancy (ACB) pages for firm licensing, firm registration, ownership rules, CPE and Quality Assurance Review (QAR) obligations (ACB firm-licensing and CPA firm registration pages).- Queried Washington State business resources (Business Licensing Service / business.wa.gov) and Department of Revenue (DOR) guidance for business licensing, B&O tax and electronic filing requirements.- Retrieved Washington administrative rules (WAC chapter 4-30) for Public Accountancy covering firm organization, ownership, ethics, CPE, QAR and discipline.- Retrieved Washington Employment Security Department (ESD) guidance on unemployment coverage for corporate officers (voluntary election), and Washington Department of Labor & Industries (L&I) guidance for workers’ compensation account setup and owner coverage.- Retrieved IRS guidance for PTIN requirements for tax return preparers.

Analysis and key findings (state-specific compliance checklist for small accounting firms in Washington) 1) Washington Board of Accountancy (ACB) — CPA firm licensing and registration - Firm license required: Any firm with an office in Washington performing or offering to perform attest services (and compilation services as defined by statute) must hold a Washington CPA firm license.

Out-of-state firms without a Washington office generally do not need a Washington firm license but must meet practice-privilege/mobility requirements if offering services in WA. (See ACB firm-licensing/firm-licensing-requirements and CPA firm registration pages.)- Firm application/renewal: Firms apply via SecureAccess Washington, complete the online application, and pay applicable fees.

The ACB provides resources (laws, rules and policies) and links to RCW/WAC cited in the rules.- Ownership & organization: CPA firms may organize as sole proprietorships, partnerships, corporations, professional corporations, LLCs, LLPs, or other authorized entities.

A simple majority of financial interest and voting rights must be held by licensees (or holders of valid CPA licenses in other states) and resident non-licensee owners must register with the Board.- Practice privileges / mobility: Out-of-state firms or CPAs using practice privileges must consent to the board’s discipline authority and comply with Washington rules.- Continuing competency and QAR: WAC 4-30 includes continuing professional education (CPE) requirements and Quality Assurance Review (QAR) requirements for licensed CPA firms; the rules cover qualifying CPE activities, reporting periods and documentation and QAR obligations.

WAC also addresses confidentiality, ethics, compliance with standards, client records and discipline authority.

Business registration and state tax accounts (Business Licensing Service & Department of Revenue) - Business License Application (BLA)

Most accounting firms must file the state Business License Application (via the Business Licensing Wizard) to open a business in Washington. The BLA sets up accounts with multiple agencies (Department of Revenue, Employment Security Department, and Labor & Industries) and is the starting point for tax and employer account registration.- DOR taxes: Washington imposes an excise (B&O) tax (gross-receipts style) and many businesses must file excise tax returns with the Department of Revenue. Washington requires businesses to file electronically using My DOR (though waivers are possible). Accounting firms should register for an excise tax account and confirm whether any local endorsements or city licenses apply in their service areas.

Secretary of State and entity maintenance - Corporations, LLCs and certain entities must file an annual report with the Washington Secretary of State. Out-of-state entities operating in Washington generally must register as foreign entities and designate a registered agent.

Employment laws and employer tax/insurance obligations - Workers’ compensation (L&I)

Employers hiring employees must obtain a workers’ compensation account. L&I will assign an account manager, classify the business for rate purposes, and provide quarterly filing guidance. Owners can elect optional owner coverage for protection; instructions and forms are available from L&I.- Unemployment insurance (ESD): Corporate officers are exempt by default from unemployment coverage; employers can request voluntary coverage for corporate officers by submitting a voluntary election form and following ESD procedures. ESD provides filing deadlines and guidance for voluntary coverage, appeals and recordkeeping.- Payroll tax withholding and federal employer obligations: Employers must meet federal payroll withholding, new-hire reporting, and I-9/W-4 requirements (business.wa.gov and federal IRS guidance referenced). Washington also has Paid Family & Medical Leave and Paid Sick Leave rules relevant to payroll and employer policies. 5) Federal and professional requirements relevant to Washington practitioners - Tax preparer registration (IRS PTIN): Individuals who prepare federal tax returns for compensation must obtain and renew a Preparer Tax Identification Number (PTIN) through the IRS. Firms offering federal tax return preparation should ensure preparers have valid PTINs and comply with IRS requirements for e-file providers and tax preparer rules.- Professional standards & confidentiality: WAC 4-30 includes provisions on confidentiality of client information, integrity, objectivity, independence, acts discreditable, and recordkeeping — aligning with national professional standards. Firms should maintain written policies on data security, client records retention, and breach response. 6) Practical steps & recommended checklist for small Washington accounting firms - Determine whether your firm needs a Washington CPA firm license (office in WA performing attest/compilation services) and register with the ACB if required.- Set up a Business License Application to register with DOR, ESD, and L&I (use the Business Licensing Wizard to identify local/state permits).- Register for DOR excise/B&O tax (and sales tax if applicable) and enroll in My DOR for electronic filing and payments.- Form/maintain your legal entity and file annual reports with the Washington Secretary of State (register as foreign entity if formed out-of-state). Designate a registered agent.- If hiring employees: establish L&I workers’ compensation account, ESD unemployment account, withhold federal and state-required taxes, follow labor law requirements, and evaluate owner/officer elective coverage options.- Ensure firm ownership structure meets ACB ownership rules; register non-licensee owners if applicable.- Meet ACB CPE and QAR obligations; maintain documentation and submit required reports to the Board.- Ensure all tax preparers have current IRS PTINs and follow IRS e-file and document-retention rules.- Implement data security, breach response, and confidentiality policies consistent with WAC confidentiality rules and Washington’s consumer protection/data breach laws (consult legal counsel for statutory specifics and any recent state privacy legislation). Conclusion This research assembled official Washington sources on CPA firm licensing (ACB), administrative rules (WAC 4-30), business setup and state tax registration (Business Licensing Service and DOR), employer obligations (L&I and ESD) and federal tax preparer requirements (IRS PTIN). The above checklist synthesizes the state-specific compliance items small accounting firms in Washington must address. For firm-specific circumstances (attest vs nonattest work, out-of-state practice, employee classification, municipal licensing), consult the cited official pages and consider getting legal or accounting regulatory counsel.