Washington compliance for freelancers scaling into agencies

Key findings (actionable, state-specific guidance)1) Registering the business and getting a UBI (Unified Business Identifier)- You must register with the Washington Business Licensing Service (Department of Revenue) to obtain a UBI.

This establishes accounts with multiple state agencies and is a prerequisite for tax and payroll accounts. Use the Business Licensing Wizard or myDOR to apply and get a UBI.

Application processing fees apply (open/reopen: $90; other purposes $19). Many city endorsements (local licenses) may add fees.

Key findings (actionable, state-specific guidance)1) Registering the business and getting a UBI (Unified Business Identifier)- You must register with the Washington Business Licensing Service (Department of Revenue) to obtain a UBI.

This establishes accounts with multiple state agencies and is a prerequisite for tax and payroll accounts. Use the Business Licensing Wizard or myDOR to apply and get a UBI.

Application processing fees apply (open/reopen: $90; other purposes $19). Many city endorsements (local licenses) may add fees.

Business structure when scaling to an agency- Common choices

remain a sole proprietor, form an LLC, or elect S-Corp for tax reasons. Forming an LLC or corporation requires filings with the Secretary of State (articles of organization, initial report, annual reports) and obtaining an EIN from the IRS. Changing entity type requires opening a new UBI/account. Consider a registered agent and an operating agreement and maintain separation of business and personal finances.

Taxes Washington-specific- Washington has no personal or corporate income tax but imposes a Business & Occupation (B&O) tax measured on gross receipts. Register with the Department of Revenue and file tax returns via myDOR. Sales tax applies to retail sales of taxable goods and some services; businesses that resell goods should apply for a reseller permit. Thresholds and rate details are on DOR.

Payroll & employer accounts (when you hire employees)- When you register or refile your state business license to hire employees, your information is automatically forwarded to L&I and ESD to set up Workers’ Compensation and Unemployment Insurance accounts. Employers must remit state employer taxes

Workers’ Compensation premiums (L&I), State Unemployment Insurance (ESD employer taxes), and Paid Family and Medical Leave reporting and premiums (paidleave.wa.gov). Washington Cares Fund/long-term care guidance also applies.

Independent contractor vs employee classification- L&I provides an independent contractor determination test (see F101-063-000). To avoid misclassification risk when scaling into an agency, ensure contractors meet registration/licensing and business-account requirements, maintain separate books, and have contractual independence. If workers are employees, you must withhold and pay payroll taxes and provide coverage.

Workers’ Compensation and L&I rules- Most employers must have workers’ compensation coverage. L&I guidance details when business owners/officers may be exempt and how to elect coverage for owners or LLC members.

Paid Family & Medical Leave (PFML) and WA Cares Fund- Nearly all Washington employers have responsibilities to report employee wages/hours and submit PFML premiums each quarter; small employers (