Washington compliance for US-based teams hired by foreign owners

Title: Washington compliance for US-based teams hired by foreign owners Excerpt: A practical, step-by-step compliance guide for foreign entrepreneurs and LLC founders who hire or plan to hire employees in Washington State. 1) Quick overview — what’s different when a foreign owner hires employees in Washington - Hiring an employee based in Washington creates potential state-level obligations even if the company is foreign-formed and has no U.S. headquarters. Washington requirements can include foreign qualification (Secretary of State), a Unified Business Identifier (UBI)/business license and Department of Revenue registration (B&O/sales tax when nexus or thresholds met), Employment Security registration for unemployment insurance, L&I workers’ compensation coverage, and Paid Family & Medical Leave (PFML) premium reporting. Federal requirements (IRS withholding, Forms, I-9 verification) still apply. 2) Entity and business registration (first steps) - Foreign qualification: If you’re doing business in Washington (hiring, having an office, or otherwise creating nexus), you will usually register a foreign entity with the Washington Secretary of State (file a Foreign Registration Statement). A UBI will be issued on successful filing. - Business License / Department of Revenue: Register through Washington’s Business Licensing Service/Department of Revenue. Washington requires registration to report B&O tax and collect sales tax where you meet thresholds (physical presence or more than $100,000 in gross receipts attributed to WA, or being organized/commercially domiciled in WA). - Local licenses: Cities/counties (e.g., Seattle, King County) may require local business licenses and local taxes/endorsements — check city license pages. 3) Payroll, withholding and federal tax rules - Federal payroll: Foreign employers with employees performing services in the U.S. generally must withhold and deposit federal income tax and FICA (Social Security and Medicare) unless a specific exception applies (e.g., totalization agreement or particular treaty or special exemption). Obtain an EIN and follow IRS employer rules (Form 941, deposits and reporting). Wages paid to employees in the U.S. are normally subject to U.S. withholding and reporting. - IRS guidance for employees of foreign persons: If you employ a U.S. person in the U.S. the wages are typically subject to U.S. withholding. There are special rules for nonresident aliens and treaty exemptions — consult Publication 15 and related IRS guidance. 4) Washington payroll taxes, unemployment insurance and paid leave - Employment Security (ESD) / Unemployment Insurance: Register with ESD for UI contributions for employees performing work in Washington. UI coverage and reporting are required when you employ people working in the state. - Paid Family & Medical Leave (PFML) and WA Cares: Washington requires employers to collect premiums and file quarterly reports for Paid Leave and WA Cares. Employers must notify employees and file quarterly wage/hours reports and remit premiums. Employers either withhold the employee portion or pay on behalf of employees; larger employers (50+ employees) must also pay an employer share of PFML per current rules. 5) Workers’ compensation (L&I) - Washington’s L&I requires employers to have industrial (workers’) compensation coverage for employees working in Washington. If your insurer won’t cover the work in WA, you must secure a Washington workers’ compensation policy. L&I has extraterritorial/reciprocal rules and will consider where the work is localized; contact L&I’s Out-of-State/Extraterritorial team if employees split time across jurisdictions. 6) Wage-and-hour, leave and local rules - Minimum wage and local ordinances: Washington has a state minimum wage (and higher local minimums in some localities). Seattle and other cities may have different minimum wages and leave rules. Employers must observe state overtime, meal/rest break rules, and posting requirements. - Paid sick leave: Washington state law requires employees accrue at least 1 hour of paid sick leave for every 40 hours worked. Seattle’s PSST has additional protections and rules that employers operating in Seattle must follow; Seattle’s ordinance can be more protective than state law. - Required policies and postings: Washington requires several employee notices and in many cases specific employee policies (paid leave notice/poster, PFML notices, wage/minimum-wage posting, anti-discrimination). Many physical workplace posters can be posted online for remote staff but ensure employees have access. 7) Hiring/onboarding specifics (I-9, E-Verify, remote verification) - I-9: Form I-9 verification is federal; employers must complete and retain I-9s per federal timelines. Washington does not impose additional I-9 paperwork requirements. For remote hires, use an authorized representative to inspect original documents and document the representative’s name/authority in the employer’s records. - E-Verify: Not required by Washington for private employers, unless required by federal contract. 8) Other federal compliance points for foreign owners - FinCEN / BOI (Corporate Transparency Act): FinCEN’s reporting rules changed in 2025 — the interim final rule narrowed reporting to foreign entities that have registered to do business in a U.S. State (foreign reporting companies). If a foreign company is registered to do business in WA (SOS filing), verify whether BOI filing is required and confirm the current FinCEN deadlines and procedures. - OFAC/sanctions screening: U.S. persons must comply with OFAC sanctions rules. Screen hires and payments as part of KYC/AML and vendor onboarding where relevant. - Cross-border payroll, totalization agreements & social taxes: U.S. Social Security/Medicare withholding generally applies to employees working in the U.S., though some employees may be exempt under a totalization agreement depending on their home country and facts. Work with a payroll/cross-border tax advisor. 9) Practical operational checklist (first 60–90 days) - Step 1: Confirm where each employee is performing services (their state/locality) and document localization for tax, PFML and workers’ comp. - Step 2: If doing business in WA, file foreign registration with WA Secretary of State (Foreign Registration Statement) and get a UBI. - Step 3: Register with WA Department of Revenue (business license/UBI) to determine B&O/sales tax obligations (watch the $100k receipts threshold for economic nexus). - Step 4: Register with Employment Security Department (ESD) for unemployment insurance and for Paid Leave reporting. Create employer account and plan for quarterly reporting and premium withholding/remittance. - Step 5: Register with L&I (workers’ compensation) and confirm coverage or obtain WA policy. Contact L&I’s Out-of-State unit for extraterritorial questions. - Step 6: Implement payroll that handles federal withholding, FICA, PFML withholdings/WA Cares premium, and ESD/L&I reporting. Consider a U.S. payroll provider, PEO or Employer-of-Record (EoR) if you want turnkey compliance. - Step 7: Complete I-9s and retain properly; use an authorized representative for remote hires if necessary. Post required notices and provide PFML/paid leave notices to employees. - Step 8: Run OFAC checks on individuals/entities where appropriate and consult counsel on BOI filing if you registered in WA. 10) Practical risk-reduction tips and service options - Consider using a U.S.-based payroll provider, PEO, or EoR to manage UI, workers’ comp, PFML, payroll taxes and benefits administration — faster compliance and lower operational risk. - Maintain written HR policies tailored to Washington law (leave, paid sick leave, pay transparency, domestic violence leave, meal/rest breaks, non-compete limits and required notices). - Engage a U.S. CPA with cross-border experience for payroll tax, state nexus and tax treaties; an employment attorney for Washington-specific employment law and to draft compliant agreements and handbook addenda. 11) Helpful agency resources & links (authoritative sources cited) - WA Department of Revenue – Out-of-state businesses reporting thresholds and nexus: https://dor.wa.gov/education/industry-guides/out-state-businesses-reporting-thresholds-and-nexus - WA Secretary of State – Register a Foreign (Non-WA) LLC online / foreign registration instructions: https://www.sos.wa.gov/corporations-charities/business-entities/online-filing-instructions/register-foreign-non-wa-limited-liability-company-llc-online - WA Department of Labor & Industries (L&I) – Out-of-state employers and out-of-state workers (workers’ comp guidance): https://lni.wa.gov/insurance/insurance-requirements/do-i-need-a-workers-comp-account/out-of-state-employers-and-out-of-state-workers - WA Paid Family & Medical Leave (PaidLeave) – Employers: https://paidleave.wa.gov/employers/ - WA PaidLeave reporting & premiums: https://paidleave.wa.gov/reporting/ - WA Paid Leave employer roles: https://paidleave.wa.gov/employer-roles-responsibilities/ - Washington paid sick leave (L&I): https://www.lni.wa.gov/workers-rights/leave/paid-sick-leave/ - Seattle Office of Labor Standards – Paid Sick and Safe Time (PSST) Q&A (Seattle-specific): https://www.seattle.gov/documents/departments/laborstandards/qa_psst_updates_07232025.pdf - FinCEN BOI (Corporate Transparency Act) and recent IFR: https://www.fincen.gov/boi and https://www.fincen.gov/news/news-releases/fincen-removes-beneficial-ownership-reporting-requirements-us-companies-and-us - IRS – Persons employed by a foreign person (withholding and Social Security / Medicare guidance): https://www.irs.gov/individuals/international-taxpayers/persons-employed-by-a-foreign-person - OFAC – Basic information on sanctions: https://ofac.treasury.gov/faqs/topic/1501 Summary: actionable takeaway - A foreign owner hiring employees located in Washington should assume it will have to: (1) register the business (SOS foreign registration + Dept. of Revenue/UBI where thresholds or physical nexus exist), (2) set up payroll that meets federal withholding and WA-specific requirements (ESD unemployment, Paid Leave premiums/quarterly reports, WA Cares), (3) obtain Washington workers’ compensation or confirm extraterritorial coverage, (4) comply with state wage/leave/minimum wage and local rules (Seattle PSST if applicable), and (5) complete federal onboarding steps (I-9) and comply with BOI/OFAC/IRS rules as applicable. Use a PEO/EoR, U.S. payroll provider and U.S. counsel/CPA to reduce operational risk. If you want, I can now expand this into: (A) a full-length SEO-optimized blog post (1,200–1,800 words) formatted for your CMS with headings, FAQs, meta description and meta keywords; (B) a downloadable compliance checklist/one-page playbook for foreign owners hiring in Washington; and (C) a short newsletter HTML/body content matched to your "default" template. Tell me which of these to prioritize.