If you own a business in WA state, you'll need to file excise taxes.
If you don't there is a high likelihood the DOR will assess taxes against you. Washington State excise taxes are usually below 1% of gross revenue not as onerous as B & O Taxes, the most common tax. However, if you are selling goods and some services, sales taxes come to play on the local level.
As a business owner, understanding how to handle your tax responsibilities is a key part to your business's success.
Do You Need to Collect Sales Tax for Online Sales in Washington State?
Yes, in most cases, you’re required to collect sales tax on online sales shipped to customers in Washington State. The Washington Department of Revenue (DOR) treats online sales much like sales made in-person—meaning if your customer lives in Washington and receives the item there, you’ll likely need to charge them sales tax.
Keep in mind:
- Marketplace facilitators like Amazon often collect and remit sales tax for you. If you’re selling through your own website, however, the responsibility falls on your business.
- Washington uses destination-based sales tax. That means the tax rate depends on where your buyer receives the goods, not where your business is located.
- Even out-of-state sellers must comply with Washington’s laws if they meet certain sales thresholds.
If you’re unsure about your specific obligations—or want to confirm you’re following the best practices—it’s wise to consult the DOR’s guidelines or speak with a local expert.
Understanding the Washington State Annual Business License Renewal
Every business operating in Washington State must renew its annual business license. This process keeps your business in good standing with the state and ensures you're authorized to continue operating legally.
But does filing your annual renewal impact your taxes? Not directly. Renewing your business license is separate from filing excise taxes—it’s essentially your annual 'permission slip' to do business in the state. However, keeping your license current is important, as falling behind can trigger unwanted scrutiny from the Department of Revenue (DOR) and potentially complicate your tax filings.
Here’s what you should know:
- License renewal = compliance: Renewing on time signals to state agencies (including the DOR) that your business is active, organized, and following the rules.
- Separate from taxes, but related: You’ll still need to file your excise tax returns throughout the year—think of your license as the ticket to participate, and your tax filings as the price of admission.
- Don’t risk penalties: Letting your license lapse can lead to penalties, back taxes, and even forced business closure in extreme cases.
If you’re unsure about the renewal process or how it ties into your tax responsibilities, this is another area where consulting a local tax expert or Enrolled Agent can make all the difference. Staying proactive helps you avoid surprises down the line.
Do You Need a Reseller’s Permit?
If your business purchases items specifically to resell them (without using them first), you’ll likely need a reseller’s permit in Washington State. This permit allows you to buy inventory tax-free from suppliers—but be careful, it comes with responsibility. Using a reseller's permit inappropriately (for supplies, equipment, or personal use) can lead to penalties.
Here’s who typically needs a reseller’s permit:
- Retailers and Wholesalers: If you sell tangible goods to customers or other businesses.
- Some Service Providers: If your services include selling products (like installation with parts).
If you’re unsure, or if your business model involves both sales and services, a quick chat with a tax expert (or the DOR itself) can save you headaches down the road. And as always, make sure your permit is up to date to keep your business in compliance.
Reaching out to a local tax professional or licensed Enrolled Agent (E.A.) like those at Washington Tax Services can offer clarity and direction for how to approach. WATAX has been in business 35+ years helping businesses (small and large) sort through the noise and confusion around tax requirements and the best path forward.
