If you want to start and run a Washington limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Washington LLCs.
The State of Washington requires you to file an annual report (also known as an annual renewal) for your LLC. The report must be filed online at the Secretary of State website. The initial annual report must be filed within 120 days of the date you filed to create your LLC. Subsequent annual reports are due on dates determined by the Secretary of State. You should receive a notice from the state approximately 45 days before a report is due. The current filing fee for annual reports is $71 (not including convenience fee for credit and debit transaction).
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members.
Washington is one of only a very few states that does not have a personal income tax or a corporation income tax. Consequently, for most LLCs, including those that may have elected to be taxed as corporations, no state income taxes are due. Moreover, because Washington also doesn't have a personal income tax, LLC members generally will owe no state tax on income they earn from a Washington LLC.
However, Washington does have a so-called business and occupation (B&O) tax. This tax applies to the gross receipts of most businesses, including LLCs. The B&O tax rate for a business is based on that business's classification. Examples of key classifications include: retailing, wholesaling, manufacturing, and service and other activities. The tax is paid to the Department of Revenue (DOR). For more information, including specific rates and classifications, check the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, some Washington employers also must pay taxes to the state.
More specifically, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Washington's Employment Security Department (ESD). You can register for these taxes onlinethrough the state's Business Licensing Services or on paper using Form BLS-700-028 (Business License Application). Then, each quarter, use Forms 5208A and 5208B to report on wages and pay the UI taxes. For more information , check the ESD website.
If your LLC will sell goods to customers in Washington, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue. You can register online through Business Licensing Services or download a fillable Form BLS-700-028 (Business License Application). Then, on a periodic basis (for example monthly or quarterly), you'll have to file sales tax returns with the DOR.
If you will be doing business in states other than Washington, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Washington, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.