Washington Small Business Checklist

Getting a Business Started

Form a sole proprietorship, partnership, or corporation in the state of Washington:

Visit WA Secretary of State website Washington Secretary of State - Corporations and select the “Start a Business” link. Select the type of company you want to form and fill out the application.

Apply for an Employer Identification Number (EIN) Online with the Internal Revenue Service if you want to have a separate tax identification number for the company. Some sole proprietorship companies do not file for an employer identification number because they use the owner’s personal social security number.

Obtain appropriate licenses for your place of business:

Visit the Department of Revenue website File a Business License Application and select “Complete a Business License Application online” or select the paper form, print it, fill it out, and submit by mail. This application will also enroll your company for unemployment insurance and industrial insurance.

Choose “City and county licenses” link and check if you need to complete a separate application for the city license. The link will show which cities are incorporated into the master license application online, and which are not.

File with the county where the business will be located. The county has a personal property tax filing requirement for all businesses and will most likely be found online and/or at the Assessor’s Office for the county.

2120 Caton Way SW Olympia, WA 98502 (360) 754-9475 (360) 786-8174 fax www.nrsmith.com If You Have Employees

Register any new hires, or rehires over 60 days, with the Department of Social and Health Services at their website Washington State Division of Child Support .

Register for a Secure Access login by going to SecureAccess Washington Registration . This account will help with filing reports for unemployment insurance, industrial insurance, and possibly other state agencies where applicable.

All employers must have an I-9 forms completed for each employee. The forms can be found at USCIS - I-9, Employment Eligibility Verification .

Verify validity of social security number and name provided by registering at Social Security Online - Business Services Online and using the service.

Requirements for Unemployment Insurance in Washington:

The company/organization must file for unemployment insurance before employees can work. The application can be made at the Department of Revenue’s website File a Business License Application .

Corporate Officers may claim to be exempt from coverage by completing the required form found at Employment Securities website Exempting corporate officers from unemployment- insurance coverage . If the corporate officer seeks to become exempt, they may have to increase the amount paid under the Federal Unemployment Tax Act because they no longer can claim the state tax credit.

Corporate Officers who do not have employees can elect to be a part of unemployment by completing the form found at the Employment Security Department.

Unemployment taxes are due quarterly and should be filed online through the Secure Access Website.

Requirements for Industrial Insurance through Labor and Industries of Washington:

The company/organization must file for industrial insurance before employees can work. The application can be made at the Department of Revenue’s website File a Business License Application .

Sole proprietorships, partners, and corporate officers are exempt from coverage of industrial insurance unless they opt into coverage by completing the form at Labor and Industries.

2120 Caton Way SW Olympia, WA 98502 (360) 754-9475 (360) 786-8174 fax www.nrsmith.com Industrial Insurance taxes are due quarterly and should be filed online through Secure Access Website.

Requirements for Internal Revenue Service:

All employees must complete the W-4 form and should update it whenever applicable. The W-4 form can be found at Forms and Instructions (PDF).

Federal unemployment taxes must be collected and deposited at least annually. If at any time during the year the amount exceeds $500 then it must be deposited within the month following the end of the quarter. Deposits can be made at the EFTPS website created for the company. Form 940 must be completed and filed each year (find under Forms and Instructions).

Medicare and taxes for the Federal Insurance Contributions Act (FICA) must be collected and deposited at least monthly to the Internal Revenue Service. Deposits may be required more frequent depending on the amount of taxes collected in a period. It is critical to make sure all deposits are made timely. The deposits can be made at the EFTPS website created for the company. Form 941(found under Forms and Instructions), must be completed and filed each quarter and should agree with the amount of wages and taxes collected.

If your company is an S-Corporation and you either pay or reimburse an employee that owns 2% of the company or more for medical premiums, the payment will be included as wages on the employee’s W-2. The amount should be listed as part of wages, in box 1 of the W-2, but they are not subject to FICA, Medicare, or FUTA taxes. The amount should also be listed in box 14 for easy identification for the tax preparer.

If you are self-employed or own 2% or more of an S Corporation then Medicare premiums may be deducted similar to a self-insurance medical deduction. If Medicare insurance is paid or reimbursed by the company, the amount must be included as taxable wages on the shareholder’s W-2 in box 1. Partnerships must list the amounts as guaranteed payments.

At the end of the year employee wages are reported to the IRS by filing a W-3 summarizing wages paid for the year and individualW-2 reports reflecting each employee’s annual earnings. The W-2 forms are provided to the IRS and employees. The forms can be found at Forms and Instructions (PDF). These are due no later than the end of January. It is essential to make sure the total of wages on the 940, the total of all four quarters for the reported year of the 941, and W-3 form match.

2120 Caton Way SW Olympia, WA 98502 (360) 754-9475 (360) 786-8174 fax www.nrsmith.com If You Provide Services or Sell Products

Requirements for Department of Revenue:

The state requires most businesses to pay a business and occupation tax, although there are some businesses which may be exempt or can claim deductions to limit the tax due. The business can file the report through the Department of Revenue at MyAccount > Logon .

The state also requires most businesses to collect an amount for “sales tax”. The business can file the report through the Department of Revenue at MyAccount > Logon .

Many companies may purchase items which will be resold and/or purchase items which may be a component used to make something else which will be sold. Those items may be purchased without paying sales tax if the company/organization provides a resale permit to the suppliers. A reseller permit is required to be provided to the suppliers. The business can find the form at the Department of Revenue and file the reseller permit by mail or fax.

Requirements for Cities:

Many cities have a business and occupation tax similar to the state. Some cities have additional taxes depending on the type of business and the location that may be required.

Requirements for Internal Revenue Service:

The Internal Revenue Service requires businesses to report certain expenditures made to individuals, partnerships, and some corporations (vendors). At the end of the year, expenditures are reported to the IRS by filing 1096 summarizing expenses paid for the year and individual1099 reports reflecting total paid to each vendor during the calendar year. The 1099 forms are provided to the IRS and the specific vendor. In order to report the information, a W-9 must be sent and completed by the vendor. The forms can be found at Forms and Instructions (PDF).

2120 Caton Way SW Olympia, WA 98502 (360) 754-9475 (360) 786-8174 fax www.nrsmith.com