Washington compliance for wholesale sellers

This guide outlines Washington state compliance requirements for wholesale sellers, including US business owners and LLC founders. Key areas of compliance include: 1) Business registration and UBI / Business License: Required if you plan to hire employees within 90 days, sell products or services requiring sales tax collection, or have $12,000+ gross annual income.

A business license assigns a Unified Business Identifier (UBI) for tax and agency accounts. 2) Reseller permits (resale certificates): These allow buyers who intend to resell items to purchase them without paying sales tax.

Sellers must obtain a reseller permit or approved exemption certificate from customers for wholesale sales documentation. Permits are typically valid for 4 years (or 2 years in some cases).

Misuse can lead to owing tax plus a 50% penalty. Sellers must retain documentation for 5 years and can use the DOR Reseller Permit Verification Service.

This guide outlines Washington state compliance requirements for wholesale sellers, including US business owners and LLC founders. Key areas of compliance include: 1) Business registration and UBI / Business License: Required if you plan to hire employees within 90 days, sell products or services requiring sales tax collection, or have $12,000+ gross annual income.

A business license assigns a Unified Business Identifier (UBI) for tax and agency accounts. 2) Reseller permits (resale certificates): These allow buyers who intend to resell items to purchase them without paying sales tax.

Sellers must obtain a reseller permit or approved exemption certificate from customers for wholesale sales documentation. Permits are typically valid for 4 years (or 2 years in some cases).

Misuse can lead to owing tax plus a 50% penalty. Sellers must retain documentation for 5 years and can use the DOR Reseller Permit Verification Service.

B&O tax and wholesale classification

Wholesale sales of tangible personal property delivered in Washington are subject to B&O tax under the wholesaling classification. Qualification requires the seller to receive and retain a reseller permit or approved exemption certificate from the buyer. Interstate (out-of-state) wholesale deliveries may qualify for an Interstate and Foreign Sales deduction.

Sales & use tax and marketplace rules

Sellers reselling to end consumers must collect sales tax. Remote marketplace sellers meeting the threshold ($100,000+ in Washington-sourced gross receipts in the current or prior year) must register, collect, remit sales tax, and report B&O. Marketplace facilitators may collect tax on a seller’s behalf; sellers should keep facilitator reports and file B&O accordingly. 5) Seller responsibilities and documentation: Sellers must obtain valid reseller permits or approved exemption certificates at the time of sale, keep copies for 5 years, and verify permits at least annually. Failure to document can result in reclassification of the sale and liability for retail taxes. The DOR offers a verification service for multiple permits.

Employer obligations (if you hire)

Indicating intent to hire on the Business License Application triggers account setup with Employment Security (ESD) and Labor & Industries (L&I). Employers are responsible for unemployment taxes (quarterly reporting), workers’ compensation insurance, payroll taxes, Paid Family & Medical Leave premiums, and compliance with wage and workplace laws.

Secretary of State and annual report

Domestic and foreign business entities must file an annual report with the WA Secretary of State by the last day of their formation/registration month each year. Filings can be made up to 180 days before expiration to maintain active status and good standing.

Industry-specific licensing and endorsements

Certain wholesale activities require additional endorsements or licenses (e.g., alcohol, cannabis, food manufacturing). The Business Licensing Wizard helps identify necessary state and local endorsements.

Local and city-level permits

Many cities and counties require additional business licenses or endorsements. While the state Business License Application may include some city/county endorsements, some local licenses must be obtained directly from the city. Practical compliance checklist for Washington wholesale sellers (recommended steps): - Form your business with the Secretary of State (if LLC/corporation) and note the filing month for the annual report. - Apply for a WA Business License via the DOR Business Licensing Wizard to obtain a UBI. - Register for state tax accounts (B&O, sales and use as needed) and request reseller permits from buyers; verify customer reseller permits and retain copies for 5 years. - Understand B&O classification: report wholesale income under Wholesaling B&O rates; claim the Interstate sales deduction for out-of-state deliveries when applicable. - Monitor marketplace/facilitator rules and Washington's economic nexus threshold ($100,000) for remote sellers. - If hiring: set up an ESD unemployment account (quarterly reports) and an L&I workers’ compensation account; comply with Paid Family & Medical Leave and other employer obligations. - Identify and obtain any industry-specific licenses (liquor, cannabis, food, firearms, transportation) and local city/county permits. - Maintain records, file timely tax returns and SOS annual reports, confirm reseller permits periodically, and consult a tax/professional advisor for complex situations.