Get your tax IDs in Washington

An EIN, if you need one, comes from the IRS. Washington then wants a business license if you meet the state’s tests, and that license is what opens the tax accounts. Forming an LLC does not do this step for you.

What’s different in Washington

• No individual income tax today, and one begins in 2028. The Department says Washington does not currently have an individual income tax. Beginning Jan. 1, 2028, a 9.9% tax applies to individuals and married couples filing jointly with annual adjusted gross income over $1 million. The small-business guide still says the state has no personal or business income tax.
• The business tax is on gross receipts. The B&O tax is a gross receipts tax on the value of products sold or the income the business earns. Labor, materials, taxes, and other costs are not deducted. You do not collect it from customers. The business pays it.
• Sales tax is the state rate plus a local rate, at the customer’s location. The state piece is 6.5%. The local rate varies by city and county. Collect the rate for the place where the customer receives the goods or services.
• The business license is a Department of Revenue application. Opening the first location costs $50 in processing fees, before any endorsement. You get a UBI number, which is a nine-digit number. People also call it a tax registration number, a business registration number, or a business license number.
• A new employer does not get one unemployment rate. For 2026 you pay 115% of your industry's average rate, and not below 1%.

Do this

1. Get an EIN from the IRS if the business needs one. A sole proprietor with no employees can often use a Social Security number. An LLC or a corporation should not. The IRS issues the EIN. Washington does not.
2. File the business license application if you meet a test. You need the license if your business requires city and state endorsements, you use a name other than your full legal name, you plan to hire within 90 days, you must collect sales tax, you must pay the Department of Revenue, or you buy or process specialty wood. Gross income of $12,000 a year or more is one of those tests. Apply through My DOR. The processing fee is $50 to open the first location, and $10 for another purpose such as hiring or a trade name. An added location has no processing fee. Endorsement fees sit on top of those numbers. The application takes about 10 business days, plus another 2 to 3 weeks when a city or state endorsement needs approval.
3. Use the UBI when it arrives. You can use it as soon as it is issued. Some licenses still have to be posted before you open to the public. The Department will also send information on sales tax and B&O tax. If you said you will hire, Labor and Industries and Employment Security send their own quarterly-report instructions.
4. Learn which B&O classification you report. There are more than 50. The rate follows the activity, and a business with more than one activity can owe more than one classification. The table prints .00471 for retailing, and .00484 for manufacturing and for wholesaling. Service and other activities prints .015 when prior-year income in that classification is under $1,000,000, .0175 when prior-year income is $1,000,000 to $4,999,999, and .021 when prior-year income is $5 million or more. Those figures are decimals, so .015 is 1.5 percent. On Jan. 1, 2027, some of those rates increase to 0.5%. The increase table includes retailing, manufacturing, and wholesaling. Through December 31, 2026 the notice prints 0.471% for retailing and 0.484% for manufacturing and wholesaling. The service rates are not in that increase table. Many cities and towns add their own business and occupation tax. The city rate is not on the state table.* Look up the city before you budget one.
5. Let the small-business credit calculate itself. It is calculated for you when you file electronically. One table applies when you have 50% or more of taxable income reported under service and other activities, gambling contests of chance, for-profit hospitals, scientific R&D, or real estate commissions. For an annual filer, that credit is available when total B&O tax is below $3,840 for periods beginning on or after January 1, 2023. The other annual ceiling, when you are under that 50 percent test, is $1,320. Monthly and quarterly rows are on the same page. Use the row for your filing frequency.
6. Set up sales tax if you sell taxable goods or taxable services. Collect 6.5% plus the local rate. The local rate varies by city and county. Collect the rate for the place where the customer receives the goods or services. Sales tax you collect is a trust fund and must be remitted. The buyer pays use tax when the seller did not collect retail sales tax. The Department’s retail sales tax page links the location lookup. Do not publish one city’s combined rate as Washington’s rate.
7. Note the excise-return rhythm. Frequency is assigned from the yearly business income you estimate. By yearly tax liability, annual is $1,050 or less, quarterly is $1,051 to $4,800, and monthly is $4,801 or more. A second table on the same page uses estimated gross income, and some of its columns overlap.* Use the table, do not average it. Monthly returns are due the 25th of the next month. Quarterly returns are due the end of the month after the quarter. The first quarter is due April 30. Annual returns are due April 15. A weekend or legal holiday moves the date to the next business day. The filing page links a “Report no business activity” page and does not, in the section quoted here, say whether a zero-sales period still needs a return.* Open that page before you skip one.
8. Ask whether you qualify to not file. Active non-reporting status means you are in business and not required to file returns. You have to meet every test, including no retail sales tax to collect, B&O gross income under $125,000 a year for years starting in 2023, public-utility gross income under $24,000 a year, and no other tax or fee owed to the Department. The income-tax FAQ says Senate Bill 6346 increases that B&O filing threshold to $250,000 a year for taxpayers who are not required to collect or pay retail sales tax or public utility tax. The FAQ does not say when the increase starts.* The filing-frequency page still prints $125,000. Use the page for the year you are filing.

The capital gains excise tax

The Department of Revenue says Washington does not currently have an individual income tax. Beginning Jan. 1, 2028, a 9.9% tax applies to individuals and married couples filing jointly with annual adjusted gross income over $1 million. It does not apply to all taxpayers. The first returns are due in April 2029. The Department says more guidance on who must file, and on how income is calculated, is still coming. The small-business guide still says the state has no personal or business income tax.

The capital gains overview still describes the 2021 law as a 7% tax on long-term capital assets such as stocks, bonds, and business interests. A June 30, 2025 notice says that, beginning with tax year 2025, the tax is 7% on the first $1 million of taxable Washington capital gains and 9.9% on the amount above that. The notice describes the higher rate as the 7% tax plus an additional 2.9%. It applies to individuals, including an owner of a pass-through or disregarded entity that sells long-term capital assets allocated to Washington.

Real estate is on the exemption list. Business assets are exempt to the extent they are depreciable under IRC section 167(a)(1) or qualify for section 179 expensing. There is also a deduction for the long-term gain on a sale of all or substantially all of a qualified family-owned small business. The standard deduction printed there is $278,000 for 2025. It is adjusted for inflation each year. The page prints 2024 and 2025 and does not print 2026. Do not type a 2026 figure onto a plan. A B&O credit for the same sale expired December 31, 2025. It was available for tax years 2022 through 2024. It is not a 2026 credit.

By structure

Sole proprietor

You may need the business license even with no LLC, once you hit a test such as $12,000 of gross income or a trade name. The capital gains tax can apply to you as an individual. B&O tax can apply to the business income itself.

LLC or corporation

The entity files B&O tax and sales tax on the business. Owners do not file a Washington business income tax return for the profits. An owner can still owe the capital gains excise tax on a sale of a business interest. The page says the tax reaches a pass-through or disregarded entity’s sale of long-term assets.

Hiring

File the business license application for employees no sooner than 90 days before the hire. That registration opens workers’ compensation and unemployment. Paid Leave and WA Cares are separate. Stay compliant has the 2026 rates. Report each new hire to the Department of Social and Health Services within 20 days.

What you get back

A UBI number, a business license, and a filing frequency from the Department of Revenue. Employee accounts arrive from Labor and Industries and Employment Security after you say you will hire.