STARTING AND OPERATING A BUSINESS IN WASHINGTON STATE

Copyright © 2008, Michael D. Jenkins
All Rights Reserved

CHAPTER 18

BACK TO STATE CHAPTERS INDEX

NOTE: This is only one of 18 chapters of the electronic book, "Starting and Operating a Business in Washington." For information on ordering the entire book and the front-end "Small Business Advisor" software, click here.

CONTENTS OF THIS CHAPTER:

I. INTRODUCTION

II. LEGAL ENTITIES

(a) In General
(b) Sole Proprietorships
(c) Partnerships
(d) Corporations
(e) S Corporations
(f) Limited Liability Companies (LLC's)

I. INTRODUCTION

Washington has a somewhat atypical and generally very friendly tax and legal structure under which businesses must operate.

For example, Washington has repealed its bulk sale law that formerly applied to most purchases of existing businesses and, more importantly, it is one of only two remaining states with no corporation or individual state income taxes and no corporation franchise or capital values taxes, all of which help to make it an excellent place to do business. Much of the state's tax revenue is derived from a relatively high sales tax and a gross receipts tax that is imposed at low tax rates on nearly all types of businesses.

In another business-friendly move, in 2003 the state enacted legislation that prohibits local governments from imposing gross receipts taxes on software development and other intellectual property creating activities, after January 1, 2004.

Until fairly recently, the state's economy has been relatively soft, in terms of the level of unemployment and other important economic measures. However, by February, 2008, the Washington unemployment rate had dropped down to 4.5%, but has since risen sharply to 5.8% in September, 2008, up from 4.6% a year earlier, but still somewhat below the national jobless rate of 6.1 in September, 2008.

To view the latest federal Bureau of Labor Statistics unemployment rate data for Washington or any other state, visit the BLS website.

The state has a relatively high cost of living, compared to national averages, and some firms in low-profit margin types of businesses will find Washington's Business and Occupations tax on gross income is more burdensome than the net income taxes imposed by most other states, since the B & O tax applies even if your business operates at a loss. In addition, Washington has the highest state minimum wage rate in the nation, which is adjusted upward annually for inflation, and which adds to the cost of doing business.

II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS.

(a) In General. A business that operates in Washington can operate as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company.

Washington law also provides for limited liability partnerships, in which no partner is liable for debts of the partnership, in general, as in the case of a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC.

Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. However, since there is no state income tax on either individuals or business entities in Washington, the choice of legal entity for tax purposes is affected only by federal income tax considerations, not by state taxes.

(b) Sole Proprietorships. In general, sole proprietorships in Washington can be started with no significant formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in most cases, at least one state license, as well. Nearly all businesses in the state, except the very smallest, must register with the state Department of Licensing and pay a small licensing fee before commencing business.

Since there is no state income tax, no separate tax form filing is required for a sole proprietorship under the Washington tax laws. Nevertheless, you will still have to include a Schedule C with your federal Form 1040, on which you will report the net income or loss from your sole proprietorship for federal tax purposes.

However, sole proprietorships, like all forms of business in Washington, are generally required to file an excise tax return and to pay the Washington Business and Occupations (B & O) tax on their gross income and many businesses must also collect and pay over sales and use taxes.

See Section IV(f) for information on the Washington B & O tax and filing requirements for individuals and see Section IV(b) for state business license requirements.

Doing business as a sole proprietor in Washington, as in any other state, is generally much simpler than operating as any other kind of business legal entity. As a sole proprietor, if you have no employees, you are not required to pay any unemployment taxes, withhold any federal or state income tax from wages, nor obtain workers' compensation coverage for yourself. However, if your sole proprietorship operates under an assumed or fictitious business name (trade name), it must register the name with the state when registering for a state business license, as is discussed in Section IV(g).

(c) Partnerships. Washington's partnership laws allow for the creation of either a general partnership, in which all partners are liable for the debts of the business, or a limited partnership, in which only the general partners are liable for debts, while the liability of limited partners is limited to the amount they have invested, in general. State law also allows for the creation of a limited liability partnership, in which no partner has personal liability (subject to certain exceptions).

There is no personal income tax in Washington, so the income of a partnership is not taxed to the individual partners for state income tax purposes.

However, like other legal entities, partnerships are generally required to pay Business and Occupations (B & O) Tax and file excise tax returns with the state. For details on Washington B & O tax return filing requirements, see Section IV(f).

A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:

• How much and what kind of property will each partner contribute to the partnership?
• What value will be placed on the contributed property?
• How will profits and losses be divided among the partners?
• How will gain or loss be allocated for tax purposes on property contributed to the partnership by one or more of the partners, where such property has a tax basis significantly greater or less than its agreed value?
• Will the partnership make an Internal Revenue Code Section 754 election to make special basis adjustments to assets when a partner buys a partnership interest or dies, or when the partnership distributes assets to a partner? (Such an election can be very beneficial for the partner in question or for his or her estate, but once made, the election cannot be revoked without IRS approval. Where a number of events requiring the special basis adjustments occur over a period of years, the tax accounting for the partnership can eventually become grotesquely complicated and extremely difficult to do correctly, unless the partnership is able to retain some exceptionally bright accounting talent to make the necessary tax accounting adjustments.)
• When and how will profits be withdrawn from the partnership?
• How will certain partners be compensated for their services to the partnership (if at all)?
• How will partners be compensated for making capital available to the partnership?
• How will changes in ownership of interests in the partnership be handled?
• When will the partnership terminate its existence?
• How will the assets and liabilities of the partnership be handled when the partnership is terminated?

GENERAL PARTNERSHIPS

As a rule, general partnerships in Washington can be formed with no significant formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), you will need to register with the state Department of Licensing and it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and a state business license for any type of partnership, including general or limited partnerships, or limited liability partnerships.

A general partnership may, though it is not required to do so, file a Statement of Partnership Authority with the secretary of state, stating which partners in the partnership have the authority to execute instruments that transfer ownership of real estate held in the name of the partnership and specifying any authority or limitations on partners authorized to execute such instruments or perform various other acts on behalf of the partnership. There is a small fee for filing a Statement of Partnership Authority.

LIMITED PARTNERSHIPS

A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under Washington law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a certificate of limited partnership with Corporations Division of the office of the secretary of state, together with a filing fee of $175.

Foreign limited partnerships must also register before being allowed to do business in Washington, and must pay a registration fee of $175.

For information on limited partnership filing requirements, see the contact information for the offices of the Washington Secretary of State, listed in Section VI(a).

LIMITED LIABILITY PARTNERSHIPS

Limited liability partnerships (LLP's) are a relatively new form of partnership permitted under the laws of Washington. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization.

Partners in a general partnership can obtain a significant degree of limited liability by simply registering the partnership with the state as an LLP.

To form an LLP in Washington, a majority in interest of partners, or a partner authorized to execute an application, must register with, and pay a filing fee of $175 to the secretary of state.

Foreign LLP's, those created under the laws of another state, must also register with the secretary of state and pay a fee of $175.

Every LLP doing business in Washington, including both domestic and foreign LLP's, must file an annual notice and pay an annual renewal fee of $50.

LLP's that render professional services are required to carry professional licensing insurance in amounts set by the state insurance commissioner, which may range from $1 million to as much as $3 million. Failure to obtain such insurance or set aside adequate security in lieu of insurance will cause the partners in a professional partnership to lose their limited liability, to the extent that, if such required insurance or other evidence of responsibility had been maintained, it would have covered the liability in question.

Note that one potential drawback of LLP's, if you will do business in other states besides Washington, is that some states, like California and New York, only recognize certain types of professional partnerships as LLP's. If yours is not such a professional partnership, the other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability.

For more information on LLP registration and reporting requirements, see the contact information for the offices of the secretary of state, listed in Section VI(a).

(d) Corporations. To form a corporation in Washington, you must file articles of incorporation with the Washington Secretary of State and pay a filing fee of $175 for filing and the first year's license fee.

A foreign corporation (one formed under the laws of another state or a foreign country) must obtain a certificate of authority before it may legally conduct business in Washington, by filing an application for a certificate of authority and paying a filing fee of $175.

For more information on filing articles of incorporation or applying for a certificate of authority to do business in Washington, see the contact information for the offices of the secretary of state, listed in Section VI(a).

In addition, once your corporation is formed, it will be required to file annual reports and a license fee of $50 and a filing fee of $9 with the secretary of state each year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter.

While corporations, other than S corporations, must pay federal income taxes on their taxable income, there is no state corporation income tax or franchise tax in the state of Washington. However, like all other forms of business, corporations are subject to the Business and Occupations (B & O) Tax, which is based on gross income. For details on Washington B & O tax return filing requirements, see Section IV(f).

(e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal tax purposes to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual federal income tax returns.

Since there is no individual or corporate income tax in Washington, the existence of a federal S corporation election is not relevant for state income tax purposes in Washington. Like other corporations and all other business entities, S corporations are subject to the Washington Business and Occupations (B & O) Tax, which is discussed in Section IV(f).

(f) Limited Liability Companies. Washington, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or a corporation, a business that operates in Washington may also choose to operate in the form of an LLC. In most states, including Washington, LLC's are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes.

Since there is no state income tax in Washington, members of an LLC need only be concerned with federal, not state, income taxation. However, as discussed in Section IV(c), LLC's, like other business entities in Washington, are almost always subject to the states Business and Occupations (B & O) Tax. For details on Washington B & O tax return filing requirements, see Section IV(f).

To form an LLC under the laws of Washington, one or more persons must file articles of organization with the secretary of state, which must be accompanied by filing fees of $175, as set by the secretary of state.

Washington state law now allows formation of one-member LLC's. Such single-owner LLC's now qualify for treatment as sole proprietorships for federal tax purposes.

Foreign LLC's, those formed under the laws of another state, must obtain a certificate of authority to do business in Washington, by filing an application for a certificate of authority with the secretary of state and paying a filing fee of $175.

In addition to initial filing fees, all LLC's, domestic or foreign, must subsequently file annual reports. LLC's must also pay an annual report filing fee of $10 for the initial year and $50 with each subsequent annual report. There is also an additional $9 handling fee required with each annual license renewal. Filing fees for LLC's are set by the Secretary of State.

For more information on filing articles of organization for an LLC, see the contact information for the offices of the secretary of state, listed in Section VI(a).

III. BUSINESS ACQUISITIONS

(a) In General. When acquiring an existing business, there are a number of state legal and tax issues and other matters that you, or, for some items, your business attorney or CPA, should attend to before closing the purchase, to help prevent later, unpleasant surprises. These include matters such as:

• Doing a title search for any real property that is being acquired (your attorney);
• Checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired (your attorney);
• Performing a thorough review of business books and records, including tax returns, payroll records, corporate minute books, and receivables and payables (your accountant, usually);
• Reviewing the status of any leases, contracts, or pending litigation involving the seller, as well as all intangible property rights, such as trademarks, service marks, patents, or copyrights (your attorney);
• Taking a physical inventory of all furniture, fixtures, inventories, equipment and other tangible personal property or real estate, to be sure of exactly what you are buying;
• Discussions with important customers and suppliers of the business to make sure there are no pending disruptions of relationships with key customers or suppliers; and
• Consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws and other state tax laws, such as sales and use tax or property tax laws.

Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below.

(b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public.

Washington is one of the states that has repealed its bulk sale laws, so you no longer have to be concerned with this burdensome requirement when buying a business in Washington. However, note that if, as a buyer, you acquire in bulk sale more than 50% in fair market value of the assets of a taxpayer leaving business, you will be liable as a successor for business and occupation (B & O) and sales taxes owed by the seller.

(c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business occurs.

In Washington, you should obtain tax releases for the unemployment taxes and various other state taxes that may be owed by the seller.

To avoid becoming liable for unpaid unemployment taxes of the selling business, you should require the seller to obtain a tax release, showing that no tax is due, from the Washington Department of Employment Security.

Similarly, the seller should be required to provide you with a tax status letter from the Washington Department of Revenue, showing that you are not required to withhold any B & O, excise, or sales and use taxes from the purchase price you will be paying to the seller.

In July of 2005, the Department of Revenue developed a Successorship Notice Form that you should file when acquiring an existing business in Washington. By doing so, you are relieved any successor tax liability unless the Department of Revenue issues an assessment within 6 months against the seller and notifies the successor by mail at such time.

(d) Unemployment Tax Rating of Seller. In Washington, a new employer has generally been assigned an initial unemployment tax rate based on the average experience rating of other companies in the same industry. After 3 years, you are then assigned an experience rating that is based on your firm's experience record of employee terminations, with the rate being higher if you have had numerous employee terminations, where the employees were eligible for unemployment benefits.

However, since 2005, if you acquire an existing business, and you were not an employer prior to the acquisition, you will now inherit the acquired firm's existing experience rating. For subsequent years, the tax rate will be calculated using a combination of the successor's own experience and that transferred from the acquired business. For more information, contact the Washington Department of Employment Security.

PLANNING POINT:

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Besides possibly obtaining a lower unemployment tax rate and experience rating, another clear advantage of being treated as a successor employer is that you may take into account wages already paid to the acquired employees by the former employer during the year of the acquisition. Thus, you will not have to pay tax on the amount of wages paid to an employee in that year by the former employer, who will have already paid unemployment tax on such wages, for which you may take credit, in determining the amount of tax owed on total wages paid to that employee for the year.

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EXAMPLE:

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Employee X has already earned wages equal to or exceeding the current year taxable wage base amount, while employed by the former employer, on which the former employer has paid the unemployment tax. Thus, as a successor employer, your business would not incur any unemployment tax on wages you pay to Employee X for the remainder of the year of the business acquisition.

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IV. WASHINGTON TAXES AND OTHER GENERAL REQUIREMENTS.

(a) In General. The most notable aspect of tax structure in the state of Washington is that there is no state income tax on either individuals or corporations, and no corporate franchise tax on capital. However, while the absence of an income tax is an attractive feature, this does not mean that Washington is a low tax state. The Business and Occupations ("B & O") tax, imposed on gross income, is often a significant burden, since it applies equally to companies that are losing money and those that are operating at a profit. The sales tax, which accounts for nearly half of the state's tax revenues, is also relatively high, although it is imposed on the consumer, rather than the business, except to the extent a business makes purchases that are subject to sales or use tax.

In October, 2007, Washington was ranked as 11th best among the states in terms of its business tax climate, although it has also been ranked recently as having the 19th highest per capita tax burden among the states.

For state tax forms and tax information, see the contact information for the Washington state Department of Revenue in Section VI(a).

(b) State and Local Licensing. Nearly any business, operated anywhere in the United States, will have to have at least one government license of some kind. In most cases, this will be a local license, issued by your city or county. Before you open your business, contact your local city or county hall and find out if your particular business needs one or more local licenses. Most kinds of local business licenses are granted upon payment of a fee, with no further requirements, except possibly for annual or other periodic renewal fees.

However, if you are engaging in any kind of food business, you will usually need to also obtain a health department permit and show that you are in compliance with health department food-handling requirements. In addition, be sure to check with an attorney or local government zoning or planning department officials to determine if your business will be in compliance with all local zoning and planning restrictions. If you own or rent any type of facility, you will generally need fire department permits, showing that you meet fire safety codes and any construction or improvements to an existing structure will usually require a building permit.

If you intend to simply operate your business from your home, you may be in violation of local zoning requirements, but this is less likely to be a concern if you don't have clients, customers, suppliers, or employees coming to your house on business, on a regular basis.

STATE LICENSES

State governments have traditionally required special licenses for many kinds of professionals, such as physicians, dentists, lawyers, and accountants. To further protect consumers, Washington has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing.

In Washington, most businesses must register with the state Department of Licensing, by filing a Master Business Application, which can be filed with any of a number of state agencies, such as the Departments of Revenue, Labor and Industries, and Employment Security, and the Corporations Division of the Secretary of State, as well as with the Department of Licensing. After you register, you will be assigned a Uniform Business Identifier (UBI) number that you must use in your dealings with all state agencies in Washington. Registering by filing the Master Business Application will also meet your registration requirements for the state Business and Occupations Tax (B & O Tax), which applies to all but the smallest businesses. A $15 processing fee must be paid with each Master Business Application, and there is an additional $5 fee if you are registering a fictitious business name.

See Section IV(f) for more information on the B & O Tax.

Note that certain small firms with under $12,000 of gross revenues, and which do not make sales that require collection of sales taxes, are not required to register with the Department of Licensing or file any tax returns with the Department of Revenue, unless required to pay taxes or fees to the Department of Revenue. However, such small firms may still be required to register with the Department of Labor and Industries for industrial (workers' compensation) insurance or with Employment Security for unemployment insurance, if applicable.

If you will be using any trade name or fictitious business name in your business, you may also register the name at the same time, as part of the registration process, when you file the Master Business Application.

For assistance with state licensing and business registration requirements in Washington, see the contact information for the offices of the Department of Licensing, listed in Section VI(a).

(c) Income and Franchise Taxes. Washington is one of only four states, along with Nevada, South Dakota, and Wyoming, that does not have either a corporate or individual income tax, or a corporate franchise tax, and is the only state besides South Dakota that also does not have a corporate tax on capital. Thus, whether your business is a sole proprietorship, a partnership, a limited liability company, or a corporation, you will only have to be concerned with payment of federal income taxes, not Washington state income taxes, on your business in the state of Washington.

Instead, most businesses in Washington will be concerned mainly with three types of taxes, the Business and Occupations (B & O) tax, the sales and use tax, and property taxes on both real estate and personal property.

The business and occupations (B & O) tax is based on the gross receipts of your business, with a few limited deductions and exclusions or exemptions. It applies equally to sole proprietorships, partnerships, corporations (including S corporations), and limited liability companies (LLC's). For more information about this tax, see Section IV(f).

TAXATION OF SOLE PROPRIETORS AND PARTNERSHIPS

Since there is no state income tax in Washington, an individual is not subject to state tax on his or her income. The net income of a partnership is also not subject to tax by the state. However, the B & O tax, discussed in Section IV(f), will generally apply to the gross receipts of any form of business, including sole proprietorships and partnerships. In the case of a partnership, the B & O tax is paid by the partnership, not the partners.

TAXATION OF CORPORATIONS

Washington state does not impose any kind of state income tax, franchise tax, or capital values tax on corporations that do business in the state. However, the B & O tax, discussed in Section IV(f), will generally apply to the gross receipts of a corporation (including an S corporation), as well as to any type of unincorporated business.

TAXATION OF LIMITED LIABILITY COMPANIES

Washington does not impose any kind of tax on net income, so neither an LLC nor its members are subject to Washington state tax on the income of a business that operates in the form of an LLC. However, the B & O tax, discussed in Section IV(f), will generally apply to the gross receipts of the business. The B & O tax is paid by the LLC, rather than by its members.

(d) Sales and Use Tax. Washington imposes a general sales tax on retail sales of tangible personal property and certain types of services at the statewide rate of 6.5%. In addition, local governments are allowed to adopt local sales taxes, at varying tax rates. Combined rates are 9% or nearly so in some major urban areas like Seattle and Tacoma, and are at least 7% in all parts of the state, or over 8% in other major cities such as Olympia and Spokane. Any city or county may impose a basic 0.5% sales tax and up to an additional 0.5% without voter approval.

UPDATE NOTE:

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In the November, 2008 election, Washington voters in King, Pierce and Snohomish Counties approved Proposition No. 1, which increases the Regional Transit Authority (RTA) sales and use taxes in those counties by an additional 0.5%, effective April 1, 2009. An additional 0.1% tax is added on that date for Snohomish County, to be used for chemical dependency and mental health purposes.

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Sellers are required to collect and pay over the state and local sales and use taxes to the Washington Department of Revenue. Every person who does business in the state, including those not subject to sales tax, must register with the state and obtain a certificate of business registration. Unlike most other states, however, Washington does not require a business to obtain a separate sales tax permit.

There are numerous exemptions from the sales tax, the most important of which is the resale exemption. If you are a wholesaler or retailer who purchases goods that you will resell, your purchase of such goods may qualify as an exempt sale for resale. Similarly, if you sell goods to wholesalers or retailers for resale by them, your sale may also qualify as an exempt sale for resale. In any such transaction, the exemption is ordinarily available only if the purchaser gives the seller a valid resale certificate, certifying that the items are being purchased for resale, and not for use or consumption by the buyer.

If you have Internet access, you can download a resale certificate form from the website of the Department of Revenue (DOR). See Section VI(c) for a link to the DOR website, then click on the "Forms" item on their website to locate and download or print out the resale certificate form.

Some of the other most frequently used exemptions from the retail sales and use taxes include:

• groceries;
• prescription medicine;
• free hospitals;
• newspapers;
• some sales to farmers;
• machinery and equipment, including cogeneration and pollution control machinery and equipment, used directly in a manufacturing operation; and
• labor and services involved in the installation and repair of machinery and equipment, including co-generation and pollution control machinery and equipment, used directly in manufacturing operation.

While services are generally exempt, a number of service industries, ranging from landscape maintenance to massage therapy, have been made subject to sales tax in recent years, as the state seeks new sources of revenue. In addition, while Internet access services are protected from sales tax by the federal moratorium on such state taxes, Washington comes under a "grandfather clause" that allows it to continue imposing both sales tax and Business and Occupations (B & O) tax on such services, until at least November, 1, 2007 (or, presumably, until 2014, now that Congress extended the moratorium again). At least the Washington Department of Revenue has issued a tax advisory notice to that effect, taking a somewhat controversial position as to how the federal moratorium law should be interpreted. (A position that may be challenged in the courts.)

UPDATE NOTE:

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Services subject to sales tax include physical fitness services, such as fees or dues charged by health and fitness clubs. However, the Department of Revenue has recently ruled that certain exercise practices, such as Tai-Chi, yoga, and Qi Gong, which are practices based on Eastern philosophy, are not generally subject to sales tax (or to B&O tax), even though there are said to be health benefits to doing such exercises; but if such classes are held in a health club, they will not be exempt, since the primary focus of any such class is presumed to be physical fitness.

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A shadow tax, the use tax, is also imposed at the same rate as the sales tax. It is primarily intended to tax property that is acquired from sources outside of the state, in transactions not subject to sales tax, when such property is used or consumed within Washington. Use tax may also apply to items purchased on an exempt basis, such as for resale, if such items end up being used or consumed, instead of being resold.

Before making any taxable sales, you will need to register with the Department of Licensing by filing a Master Business Application, to obtain a Uniform Business Identifier number.

Washington has joined more than 30 other states that now allow certain large companies to apply for and obtain direct pay permits, which allows them to directly pay sales and use tax on their purchases, rather than paying sales tax to sellers of certain specified types of goods and services. If your business sells such goods or services to a company that holds such a direct pay permit, you will not be required to collect sales tax on the transaction if the buyer gives you a copy of its direct pay permit and you retain the copy in your records.

Washington petitioned for membership under the Streamlined Sales and Use Tax Agreement (SSUTA) among states, as of July 1, 2008, by which time Washington's sales and use tax law had to be in full compliance with the SSUTA requirements.

UPDATE NOTE:

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Starting on July 1, 2008, to comply with SSUTA, the applicable local sales tax rates in Washington are determined based on the destination of the goods that are sold, rather than based on the location of the seller, when goods are shipped or delivered to the customer. However, most small businesses will be entitled to claim a tax credit of up to $1,000 for the costs of changing over their accounting systems to destination-based sourcing of sales. Alternatively, an eligible small business may choose to use a certified service provider to handle its sales and use tax administrative duties, with the state paying the provider's fees for the first two years.

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This change to a destination-based determination of which local sales tax rates are imposed is not applicable to:

• Deliveries to locations outside the state of Washington;
• Wholesale sales;
• Sales of services; or
• Sales of motor vehicles, trailers, semi-trailers, aircraft, watercraft, modular homes, and manufactured and mobile homes. Sales tax will continue to be based on the seller’s location even if the seller delivers such items to customers.

Washington now imposes sales tax on delivery charges.

For more information on Washington sales and use tax registration and compliance, see contact information for the offices of Department of Revenue in Section VI(a).

(e) Real and Personal Property Taxes. In Washington, as in every other state, any business real estate you own will be subject to real property taxes. In general, there is little that you must do, unless you wish to challenge your assessed valuation, since the assessor will bill you for each year's property taxes as they come due.

Washington also imposes personal property taxes on tangible personal property. ("Personal property" is any kind of property that is not real estate.) However, certain types of business personal property, such as business inventories, are exempt from personal property tax in Washington. Businesses are generally required to file personal property tax returns with their local county assessors each year.

While Washington law generally allows localities to tax tangible personal property, it does not allow the imposition of property tax on intangible personal property, such as stocks, bonds, promissory notes, and other such paper assets.

In 2001, Washington voters approved an initiative (Initiative I-747) that limited property tax increases to 1%. However, due to an error in the language of the initiative, in describing the pre-existing property tax law, the Supreme Court of Washington has held in a 2007 case that the constitutional amendment by the voters was unconstitutional and void, in Washington Citizens Action of Washington, et al. v. State of Washington, et al. The initiative was found invalid despite the fact that the voter pamphlet that described it did so accurately, though "vaguely," according to the court.

The decision by the state supreme court follows in the footsteps of the state courts in a number of other states where voters have sought to limit tax increases, only to have the courts void such voter initiatives, based on various technicalities in each such state. The courts generally have given great deference to the will of the voters as expressed in referenda, but have not done so in recent years in the case of attempts by voters to reduce or limit taxes, since many judges oppose such tax limitation policies.

However, within one month, in response to the state supreme court decision, the Washington Legislature met in a special one-day session on November 29, 2007, in which they effectively nullified the court's ruling, by enacting legislation to give effect to the 1% cap on property tax increases, retroactive to 2002, in accordance with the intent of voters who passed Initiative I-747.

(f) Other Business Taxes. Washington imposes a number of excise and other taxes on businesses, the most important and pervasive of which is the Washington business and occupations (B & O) tax, which is based on the gross receipts of your business. There are several classifications for the B & O tax based on the type of business activity. Each classification has its own tax rate, generally ranging from just under 1/2 of 1% to 2%, for most major categories.

Some of the major categories and the applicable B & O tax rates are:

       Retailing            .00471
       Wholesaling          .00484
       Extracting           .00484
       Manufacturing        .00484
       Services and Other   .01500

Virtually all businesses in Washington are subject to B & O tax, including corporations, LLC's, partnerships and sole proprietors, whether nonprofit or for profit. The major exempt activities are farming and the sale or rental of real estate. Very small businesses are either exempt from the B & O tax or will pay no such tax due to the small business B & O tax credit of up to $420 per year. (This credit phases out if the tax liability before the credit exceeds $420, and is completely phased out if the tax liability exceeds $840.) For a tax year of less than 12 months, the tax credit is computed at a rate of $35 per month (maximum).

Some of the provisions of the B & O tax are quite complex and can be surprising, such as the fact that one business may be subject to B & O taxes at varying rates on more than one type of activity. Also, for many years, the tax could also apply to "integrated" businesses, even to transactions where no sale takes place, such as a central distribution service supplied by a central warehouse to multiple retail outlets of the same company, or use of items that are extracted or manufactured by the same company. Fortunately, this tax on intra-company transactions has been repealed.

Businesses are generally required to file a Washington State Combined Excise Tax Return to report and pay any applicable B & O taxes and sales and use taxes to the state Department of Revenue. You should obtain or download a copy of the Department's Business Tax Guide, which will help you to better understand the often complex provisions of the B & O tax.

The B & O tax applies equally to sole proprietorships, partnerships, corporations (including S corporations) and to limited liability companies (LLC's).

IMPORTANT NOTE:

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Under state law, the B & O tax is imposed as an overhead expense on businesses, who may not pass the tax on to customers as a separately stated item -- as an auto dealer recently learned the hard way, when sued successfully in a class action lawsuit by consumers. The judgment was upheld by the state supreme court in Nelson v. Appleway Chevrolet, Inc., et al, Wash. S. Ct. (2007).

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In addition to the state B & O tax, a number of Washington local governments impose additional local B & O taxes, which are not administered by the state. Contact the city or county government to find out when and whether you are required to file a local B & O tax return in each city and county where you do business in Washington.

Other Washington state taxes include the following:

• Taxes on alcoholic beverages;
• Cigarette and tobacco products taxes;
• Gasoline and other fuel taxes;
• Motor vehicle registration taxes and fees;
• A litter tax on manufacturers and retailers or wholesalers of certain specified products that contribute to litter, imposed at a tax rate of .00015 of the taxable amount;
• A leasehold excise tax on rents paid by lessees of government-owned property, equal to 12% of the rents, plus an additional tax on that tax of 7%;
• State and local excise taxes on transfers of real estate, or transfer of a controlling interest in an entity that owns real estate, at the tax rate of 1.28% (state) plus another 0.25% or 0.50% of the transfer price, generally, in the case of local conveyance taxes.
• An estate tax on the estates of decedents, effective for deaths occurring on or after May 17, 2005 and similar to the federal estate tax, imposed at tax rates of up to 19%;
• Severance taxes on natural resources, including a timber tax; and
• Various other taxes on special kinds of businesses, such as insurance companies and utility companies.

(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group."

In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name.

If your business operates under an assumed name in the state of Washington, you should declare and register the name (or names) when you file a Master Business Application for your state business license with the Department of Licensing or other state agency. There is a $5.00 fee for registering an assumed name.

V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES

(a) Employer Registration and Withholding. If you have any employees, you will already be withholding federal income tax and FICA taxes from their wages. Since Washington has no state income tax on wages, you will not need to be concerned with any obligation to withhold state income tax. However, if you pay more than a minimal amount of wages, you will most likely be required to pay state unemployment tax, and will have to register with the state as an employer for unemployment tax purposes, as described in Section V(b).

For forms and more detailed information on Washington unemployment taxes and registration requirements for employers, see the contact information for the offices of the Department of Employment Security, listed in Section VI(a).

(b) Unemployment and Other State Payroll Taxes. If your business has one or more employees at any time during the year, you, as an employer will be required to pay state unemployment tax based on the amount of such wages paid.

Employers subject to the Washington unemployment tax are required to register with the Department of Employment Security, as part of your Master Business Application registration with the state, described in Section IV(b).

Employers are required to pay tax at rates that vary, based on industry classification and the employer's experience rating, on the first $34,000 of wages paid to each employee in 2008. Different tax rate schedules apply to different industries, for both new employers and those with experience ratings.

After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. For 2008, tax rates can range from a low of 0.35% to as much as 6.2%.

All state unemployment taxes are imposed upon you as the employer, and, under Washington law, cannot be charged to your employees or withheld from their wages.

The unemployment tax law imposes recordkeeping requirements on all covered employers. When you hire a new employee, you need to get his/her

• Full name;
• Mailing address;
• Date of birth; and
• Social Security number.

In addition, employers that are subject to the Washington state unemployment tax are required to post an unemployment tax notice in the workplace. The poster can be obtained from the Employment Security Department.

For more information on your Washington unemployment tax obligations as an employer, see the contact information for the offices of Employment Security Department, listed in Section VI(a).

(c) Workers' Compensation. Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In Washington, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. All such employers are required to obtain a certificate of coverage from the Department of Labor and Industries.

Note, however, that a sole proprietor or a partner in a partnership is generally not considered an employee. Similarly, certain officers of a corporation who are also directors and stockholders of the corporation may be exempt from being covered for workers' compensation purposes. Members of a limited liability company may be exempt if they are essentially like partners or sole proprietors and if the management of the LLC is vested in the members; or, if management of the LLC is vested in one or more managers, some or all of the managers may be exempt from the coverage requirements.

If you will have employees, you should so indicate when you register your business with the state and you will thus apply for a workers' compensation insurance account with the Washington State Fund.

Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses.

CAUTION:

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If you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance.

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As an employer, you must notify injured employees of their benefits by posting your certificate of coverage in the workplace and a Notice to Employees -- Industrial Insurance poster, available from the Department of Labor and Industries.

For more information regarding your obligations as an employer under the Washington workers' compensation laws, contact the Washington Department of Labor and Industries, at the address listed in Section VI(a).

(d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the Washington wage-hour laws. The state minimum wage law provides for a state minimum hourly wage that increases each year, indexed for the inflation rate for the twelve month period ending on the preceding September 1st. For 2007, the state minimum wage, as indexed, was $7.93 and rose to $8.07 in 2008, the highest statewide minimum wage in the nation. Minors age 14 or 15 may be paid at 85% of the adult rate, or at $6.86 in 2008.

Note that, as under federal wage-hour laws, certain classes of executive, administrative, and professional employees, as well as outside salespeople, are exempted from the Washington wage-hour rules.

State law also requires payment of overtime premium pay at time-and-a-half for hours worked in excess of 40 hours a week for covered employees, except when the employee requests compensatory time off in lieu of overtime pay. Overtime premium pay is not required for employees who are exempt from the minimum wage requirements.

Besides the federal wage-hour posters that you must display in the workplace, you must also display a state wage-hour poster, which you can obtain from the Employment Standards Section of the Department of Labor and Industries.

STATE CHILD LABOR LAWS

In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws in Washington. The state child labor laws generally requires you, as an employer, to obtain a work permit if you are to employ any minors under the age of 18. As under federal law, state law has various prohibitions on the hours that minors of different age categories may work, and generally bans the employment of minors in hazardous occupations or industries. Detailed rules apply with regard to the number of hours children of ages 14-15 or 16-17 may work per day, or per week, and as to the hours of the day when work is or is not permitted on school days or evenings before school days. Somewhat less restrictive rules apply during school vacation.

Be sure to contact the Department of Labor and Industries at the address listed in Section VI(a) for more information before you hire anyone under the age of 18 for any kind of job. If you will be hiring minors, fill out the application for the Minor Work Permit endorsement on the Master Business Application when you register your business with the state.

(e) State Occupational Safety and Health Laws. Approximately half of the states have their own OSHA-like agency, charged with administering the state's own occupational safety and health laws. The remaining states have no such enforcement agency, and thus rely instead on the federal Occupational Safety and Health Administration (OSHA) to administer the federal job safety rules within such states.

Washington is one of the states that has its own OSHA-type agency. To determine if your workplace is in compliance with federal and Washington job safety requirements, you may wish to contact the Department of Labor and Industries, and request a free on-site safety consultation. You will not be cited for any violations detected, provided that you promptly correct the unsafe conditions. This differs from the rules for consultations by federal OSHA inspectors, who are required to cite you for any violations they find.

The Washington Industrial Safety and Health Act (WISHA) of Washington provides job safety and health protection for Washington employees. The Department of Labor and Industries administers the law and adopts job safety and health regulations. All employers and employees are required to comply with these regulations.

Department representatives conduct workplace inspections and investigations to ensure compliance with safety and health regulations.

Employers are required to:

• Provide job sites that are free from recognized hazards that may cause death or serious harm to employees;
• Comply with occupational safety and health regulations administered under WISHA;
• Post required WISHA and other notices to keep employees informed of their protection and obligations under WISHA;
• Notify the Department of Labor and Industries within eight (8) hours of any fatality or probable fatality or catastrophe an injury or illness that results in two or more workers being hospitalized;
• Allow an employee representative to attend all meetings between the Department of Labor and Industries and the employer concerning an appeal of a citation by the employer;
• Allow an employee representative to accompany the department representative and the employer during an inspection or investigation of the workplace. Employers cannot withhold wages or benefits or discriminate against the employee for time spent participating in the inspection, investigation, or opening and closing conferences;
• Provide personal protective equipment when required by a WISHA regulation;
• Promptly notify an employee who was or is being exposed to toxic materials or harmful physical agents at levels that exceed those allowed by WISHA regulations; and
• Keep records of all work-related injuries and illnesses that meet the criteria specified by law.

To obtain more information on your job safety and health obligations as an employer, required posters, and possible on-site safety consultations, see the contact information for the Department of Labor and Industries, listed in Section VI(a).

(f) Other Miscellaneous State Labor Laws. Other Washington labor laws you need to be aware of, as an employer, include the following:

(1) Wage payments to terminated employees. Employers are required to pay an employee who quits or is discharged no later than the end of the established pay period. There are significant financial penalties under Washington's labor laws for failing to make such payments on a timely basis, including payment of the claimant's legal fees in a court action seeking unpaid wages, in which the employee prevails.

(2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues.

Washington does not have a right-to-work law and thus allows union shop or agency shop contracts between an employer and a union.

(3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in Washington. Washington's civil rights law prohibits unfair employment practices because of a person's:

• Filing a complaint or advocating rights
• Presence of any sensory, mental, or physical disability
• Use of a trained dog guide or service animal
• Race
• Creed
• Color
• National Origin
• Sex
• Marital Status
• Age (40+)

In addition, in 2006, Washington enacted a new legal prohibition against discrimination based on sexual orientation (including gender identity).

Employers must display a poster informing employees of their rights. You can obtain this poster from the Human Rights Commission, at the address listed in Section VI(a).

While Washington law states that employers with fewer than eight (8) employees are exempt from the state's anti-discrimination laws, recent (2000) decisions of the state supreme court, in Roberts v. Dudley, and by the state Court of Appeals, in Sedlaceck v. Hillis, have ruled that, with regard to sex discrimination or disability, employers with fewer than 8 employees can be sued under the common law of torts for discrimination, notwithstanding the specific wording of the Revised Code of Washington. However, the state Human Rights Commission will not be authorized to participate in or intervene in such tort law cases brought against small employers.

Thus, in light of the above court cases, it is possible that Washington's courts will also sidestep the small employer exemption with regard to other types of discrimination, such as discrimination based on race or national origin. Thus, even if you employ fewer than 8 people, you must be extremely careful to avoid taking any actions that could in any way be considered discriminatory, and you must not allow sexual harassment between any of your employees to occur, since such harassment is also considered to be a form of sex discrimination.

(4) Reporting new hires. Under federal welfare reform laws, employers in all states are now required to report newly-hired (or rehired) employees to a specified state agency (the Department of Social and Health Services, DSHS, for Washington employers) within 20 days after the date of hire. If filing electronically, an employer must file twice monthly (if needed) on dates that are not less than 12 days nor more than 16 days apart.

See Section VI(a) for contact information for new hire reporting, or see Section VI(c) for a link to the DSHS new hire reporting website, where you may also file new hire reports online.

(5) Washington Family Leave Act. Under Washington state law, which was recently amended to conform closely to the provisions of the federal Family and Medical Leave Act, or FMLA (effective June 7, 2006), employers are required to grant up to 12 weeks of family leave in a 12-month period to a worker who is a parent, after the birth or adoption of a child or placement of a foster child, or to care for a family member, or for the employee's own serious health condition that makes the employee unable to perform the functions of the job.

Employers covered by the family leave law are those which have 50 or more employees, generally, but employees who must be covered only include employees at a particular worksite of the employer if there are 50 or more employees within a 75-mile radius of that worksite, so some employers with 50 or more employees, if scattered across the state or country, may also be exempted from this law's requirements.

However, the state courts have held that ANY employer, regardless of the number of employees, may be sued for discrimination on account of pregnancy or disability (such as by firing or penalizing an employee who takes leave for pregnancy or disability), as discussed in the segment of this book on Washington anti-discrimination laws. In addition, state anti-discrimination laws provide that employers of 8 or more employees must provide pregnancy or childbirth leave for a period determined by the woman's health care provider.

Note that the leave allowed for disability due to pregnancy or childbirth, is in addition to FMLA leave to care for a newborn or for any other FMLA-qualifying reason. The leave for pregnancy disability or childbirth is not concurrent with the FMLA leave; both are protected leave categories under the state law.

Washington law now also provides for limited paid leave for employees to take care of a sick child or to accompany the child for needed preventive care, or to care for the serious health condition of a spouse, parent, grandparent, or father- or mother-in-law. Employees may use any paid time off program offered by the employer, such as sick leave or vacation leave, for such family care purposes. Employers are not required to provide paid sick leave or paid vacation programs, however.

In addition to the foregoing family leave benefits, a new family leave insurance law has been enacted, and employees will be able, beginning October 1, 2009, to take up to 5 weeks of paid family leave to care for or bond with a newborn child or a newly adopted child. The state will pay benefits of $250 per week to the employee who takes such leave.

(6) Lie Detector Tests Prohibited. Washington state law prohibits the use of lie detector tests in hiring as a condition of employment or of continued employment, with exceptions for employees who are involved in manufacturing, distributing, or dispensing controlled substances or employed or to be employed in sensitive positions directly involving national security.

VI. STATE SOURCES OF HELP AND INFORMATION

(a) Key State Agencies Contact Information. Washington, as many states have done in recent years, has set up a "one-stop" center to help your new or existing businesses work their way through state red tape.

You can register your business with the state for B & O tax, sales and use tax, unemployment tax, and other taxes, as well as register a fictitious business name, by filing a Master Business Application with the Department of Licensing at the address listed below for that agency. Washington has made business registration much easier and simpler than in most other states, many of which require you to register separately with various state agencies and file or publish fictitious name statements in the various counties where you do business. In Washington, by contrast, one single registration form takes care of most of your state registration requirements for the typical small business.

A listing of contacts for various key state agencies is set forth below for your convenience.

BUSINESS STARTUP INFORMATION. A key agency that can provide helpful information on getting your business up and running in Washington is the Office of Trade and Economic Development, part of the Department of Community, Trade, and Economic Development.

Office of Trade and Economic Development
Small Business Resources
Ali Raad Building
P.O. Box 42525
128-10th Ave. S.W.
Olympia, WA 98504-2525
(360) 725-4000
(800) 237-1233 (Business Assistance Hotline)

You may want to contact the above office to obtain their publication, the 2008 Washington State Small Business Guide, which contains helpful information, although it mainly consists of contact information for various government agencies, along with brief descriptions of what each does.

SECRETARY OF STATE. Contact the office of the secretary of state for information on:

• Limited partnership filings and information
• Limited liability partnership (LLP) filings and information
• Corporate filings, including articles of incorporation, and information on corporations
• Limited liability company (LLC) filings, including articles of organization, and information on LLC's
• Registration of trademarks, as well as trade names for corporations and limited partnerships.

Secretary of State
Corporations Division
P.O. Box 40234
Olympia WA 98504-0234
(360) 7253-0377

TAXES. Obtain state Business and Occupations Tax, sales and use tax, and other miscellaneous business tax forms, instructions and information from the Washington Department of Revenue, which is the main tax collection agency in Washington. Be sure to download or obtain a copy of their 2007 edition of the Business Tax Guide, which gives a good overview of the state taxes you may have to pay.

Department of Revenue
P.O. Box 47476
Olympia, WA 98504-7476
(800) 647-7706

STATE LABOR LAWS. Contact the following agency about your obligations as an employer under various state labor laws, including:

• Washington wage-hour laws
• Washington child labor laws and regulations
• Other miscellaneous Washington labor laws

Mailing Address:

Department of Labor and Industries
P.O. Box 44000
Olympia, WA 98504-4000
(800) 547-8367 (Main line)
(866) 219-7321 (Employment standards)

Physical address:

Department of Labor and Industries
7273 Linderson Way SW
Tumwater, WA 98501-5414
(360) 902-5800 (800) 547-8367

STATE LICENSES. The following agency is the main Washington state licensing agency. All businesses in the state need to register with this state agency before commencing business. Submit your completed Master Business Application to:

Master License Service
Department of Licensing
P.O. Box 9034
Olympia, WA 98507-9034
(360) 664-1400

STATE SALES TAX. Obtain information on the Washington sales and use tax law, from the Department of Revenue, at the address listed above for that agency.

EMPLOYER WITHHOLDING. No state income tax withholding is required in Washington, as Washington does not impose any income taxes.

STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject.

Status Unit
Department of Employment Security
212 Maple Park
P.O. Box 9046
Olympia WA 98507-9046
(360) 902-9500 (Main)
(360) 902-9360 (Tax Registration)

WORKERS' COMPENSATION INSURANCE. If you employ workers for whom you must supply workers' compensation coverage, contact the Department of Labor and Industries, listed above, for further information.

STATE OSHA PROGRAM. For information on state occupational safety and health laws (WISHA) that affect you as an employer in Washington, and industrial insurance (workers' compensation) requirements, or to obtain a copy of their publication, A Guide to WISHA, contact:

Department of Labor and Industries
Division of Occupational Safety and Health
P.O. Box 44600
Olympia WA 98504
(800) 4BE-SAFE (423-7233)

STATE NEW HIRE REPORTING. Washington employers must report newly hired employees within 20 days to the state New Hire Reporting Program at the following address, by mailing in a federal Form W-4 or other list of newly hired employees, filing by phone or fax, or filing online at the web site listed in Section VI(c).

ISSD Data Control
New Hire Directory
P.O. Box 9023
Olympia, WA 98507-9023
(800) 591-2760 (Employer Hot Line)
(800) 562-0479 (select Option 3 to report by telephone)
(800) 782-0624 (Fax reports in, from outside Olympia calling area)
(360) 902-8235 (Fax reports in, from Olympia calling area)

STATE ANTI-DISCRIMINATION LAWS. Contact the following state agency for more detailed information on Washington civil rights laws that may apply to your business, and to obtain anti-discrimination notices you are required to post in the workplace:

Human Rights Commission
711 South Capital Way, Suite 402
P.O. Box 42490
Olympia, WA 98504-2490
(360) 753-6770
(800) 233-3247 (Within Washington)

(b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout Washington to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you.

SBDC - Washington State University
534 E. Spokane Falls Blvd.
P.O. Box 1495
Spokane, WA 99210-1495
(509) 358-7765
(509) 358-7764 (Fax)

(c) Internet Sites. For anyone with access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major Washington state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in Washington.

Since new sites are appearing frequently, you might also want to search for other Washington government Web sites by using one of the popular Internet search engines, such as Google, MSN, or Yahoo.

To start your Internet search for Washington government information, you may want to begin with the following Internet sites:

State of Washington home page:
http://access.wa.gov/

List of Washington state agencies, boards, and commissions:
http://access.wa.gov/agency/agency.aspx

Department of Revenue (sales and use tax, Business and Occupations Tax, and other tax forms and information):
http://dor.wa.gov/

Department of Licensing (licensing requirements and fees for various business, professions and occupations):
www.dol.wa.gov/

Employment Security Department (state unemployment tax):
www.esd.wa.gov/

Department of Labor and Industries (workers' compensation, state child labor and minimum wage laws, and other labor regulations):
www.lni.wa.gov/

Washington Secretary of State's home page (corporation, partnership and limited liability company filings, trademark and trade name registration):
www.secstate.wa.gov/

Department of Social and Health Services (DSHS) New Hire Reporting Program (reporting of new hires):
http://www1.dshs.wa.gov/newhire/

(d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration office in Washington, or contact the Washington State Community, Trade and Economic Development Department, Office of Trade and Economic Development, whose address is listed in Section VI(a).

The address of the Seattle District office of the U.S. Small Business Administration is:

U.S. Small Business Administration
2401 Fourth Avenue, Suite 450
Seattle, WA 98121
(206) 553-7310

Copyright © 2008 Michael D. Jenkins
Washington chapter last full revision date: November, 2008