Washington Business Resource
When starting your new business in the state of Washington, you must register for the taxes that are associated with your business’s services. Common forms of tax for businesses in Washington include Business and Occupation tax (B&O tax), Unemployment Insurance tax, Retail Sales tax and Use tax. Depending on the nature of your business, the following taxes may also apply:
- Public utilities tax, which covers power, water and gas services
- Rental car tax, which is necessary if your business rents out vehicles
- Convention and trade center tax, which is necessary if your business offers lodging for consumers in King County
- Tobacco products tax, which is only required if you sell items such as cigars and chewing tobacco
Visit the Department of Revenue of Washington State’s Register My Business page for more information on registration requirements. You can also visit the Doing Business page, which contains details for registration requirements and applications for business licenses.
2) Business Licenses
In addition to tax registration, businesses in Washington must acquire permits and licenses that correspond with the nature of the offered services. The cost of the permits vary between businesses. For example, a license for a cigarette wholesaler may cost over $600, while a license to sell pesticide may be as low as $67. Whether your service involves handling eggs, retailing lottery tickets or acting as an employment agency, the State of Washington’s Business Licensing Service can help you narrow down the cost of permits and licenses for your specific business.
3) Local Permits
The local government in your area, such as that of your city or county, may require specific permits and licenses. Each municipality may have its own unique regulations. Here are some of the most common licenses and permits you may need.
- Alarm Permit
- Building Permit
- Business License and/or Tax Permit
- Health Permit
- Occupational Permit
- Signage Permit
- Zoning Permit
4) Incorporation Filing
Washington businesses that are corporations, non-profits, limited liability companies and partnerships must register with the state’s Corporations Division. Applications can be found on the Corporations Division’s website.
A sole proprietorship business does not need to register with the Corporations Division, but the business will take the form of the owner’s personal name. You can avoid the use of your personal name by registering for a trade name.
5) Doing Business As
Filing for a trade name allows you to create a business name that does not feature your personal name – or in the case of a limited partnership or corporation, the name of your company as registered with the Secretary of State. Before filing for a trade name, you will need to ensure the availability of the chosen name. You can perform this search at the Business Licensing Service’s search page.
For more information regarding trade names, visit this FAQ guide to trade name registration.
6) Withholding Income Taxes
Employers should track employment tax records for at least four years, following the filing process of the 4th quarter of the current year. The records may include the following items:
- Personal employee information, such as contact information and social security numbers
- The employer’s identification number
- Wage, annuity and pension payment information
- Copies of each employee’s tax withholding allowance certificate
Consult the IRS website for a list of additional items to keep in your records.
Keeping track of these records comes with a number of advantages, including the ability to monitor business growth, prepare tax returns, estimate tax deductible aspects and track the sources of your business receipts.
W-4 and W-2 Forms
Each employee must return a signed Form W-4, which is a withholding exemption certificate, to the employer. The act of sending the forms to the IRS is the employer’s responsibility.
Employers are also responsible for the Form W-2, which holds information regarding the past year’s withheld taxes and paid wages for each employee. Copy A of the form should be sent to the Social Security Administration by the end of each February. Electronic submissions are not due until the end of March.
Copies of Form W-2 should also be sent to the employees by the end of the following January. Returned copies should be stored in the employer’s records.
These following links provide information and applications for filing W-2 and W-4 forms:
- The Social Security Administration’s Employer W-2 Filing Instructions and Information page
- The Internal Revenue Service’s Employer Tax Guide
7) Employee Eligibility Verification (Form I-9)
Recently hired employees must fill out Form I-9 and return it to the employer within three days of starting the job. The employer must keep a copy of this form on file for each employee because this form provides proof of eligibility to work within the country.
Form I-9 can be obtained from the official site of the United States Citizenship and Immigration Services.
8) New Hire Reporting
The employer must report the addition or re-addition of employees within 20 days of hiring them. The required information will encompasses items such as the employee’s name, social security number, address and health benefits, as well as information on the employer. The Washington State Department of Social and Health Services provides a page for New Hire Reporting.
9) Insurance Requirements
If your Washington-based business demands employees, you will be responsible for additional expenses, such as unemployment tax and worker’s compensation tax.
Workers’ compensation tax goes toward workers who are injured on the job or fall victim to work-related illnesses. More information is available on the Workers’ Comp Insurance page by the Washington State Department of Labor and Industries.
Unemployment insurance tax aids individuals who are willing and able to work, yet unable to find a job. Visit the Employment Security Department of Washington State for more information.