Washington Business Taxes for LLCs
LLCs in Washington pay Business and Occupation (B&O) tax, retail sales tax, use tax, and federal taxes. No state income tax. Learn the rates, deadlines, and filing requirements.
Bizee Editorial Staff
Editorial Team
Washington tax snapshot
Filing fee: $200 (online) / $180 (mail)
Processing time: 2–3 business days (online)
State agency: Washington Secretary of State
Annual report due: Annually by the end of the LLC's anniversary month
State tax rate: No state income tax. B&O tax rates: 0.471% (retailing), 0.484% (wholesaling), 1.5% (services). Retail sales tax: 6.5% state rate.
How Washington taxes LLCs
Washington LLCs don't pay a state income tax or franchise tax, but they do face a unique set of state-level taxes. The most significant is the Business and Occupation (B&O) tax — a gross receipts tax applied to revenue, not profit. Most LLCs also collect and remit retail sales tax, and owners pay federal self-employment and income taxes on their share of business earnings.
The gross receipts structure is the part that catches people off guard. Because B&O tax is based on total revenue — not what's left after expenses — your LLC owes it even in a year when the business breaks even or runs at a loss.
Business and Occupation (B&O) tax — paid on gross receipts to the Washington Department of Revenue
Retail sales tax — collected from customers and remitted to the state if your LLC sells taxable goods or services
Use tax — owed when you use goods in Washington on which sales tax wasn't paid
Federal self-employment tax — paid by LLC owners on their share of business income
Federal income tax — paid by LLC owners on pass-through profits after deductions
Business and Occupation (B&O) tax
The B&O tax is Washington's primary business tax. It applies to the gross receipts of your LLC — every dollar of revenue your business takes in, before any expenses. The rate depends on your business activity classification, and most LLCs fall into one of three categories.
The 3 most common B&O rates for LLCs are: retailing at 0.471%, wholesaling at 0.484%, and service and other activities at 1.5%. If your LLC provides professional services — consulting, marketing, IT, legal, or similar work — you're in the service classification and pay the highest rate.
Washington does offer a small business B&O tax credit that can reduce or eliminate the tax for LLCs with lower annual gross receipts. A tax professional can help you figure out whether your LLC qualifies and how to apply it on your excise tax return.
Retailing: 0.471% of gross receipts
Wholesaling: 0.484% of gross receipts
Service and other activities: 1.5% of gross receipts
Out-of-state LLCs with nexus in Washington owe B&O tax if they exceed $100,000 in gross income or 200 transactions in the state
Retail sales tax and use tax
Washington's state retail sales tax rate is 6.5%. If your LLC sells taxable goods or certain services, you're required to collect this tax from customers and remit it to the Washington Department of Revenue. Local jurisdictions add their own rates on top of the state rate, so the total your customers pay varies by location.
Use tax applies when your LLC uses, stores, or consumes goods in Washington and didn't pay sales tax at the time of purchase — for example, buying supplies from an out-of-state vendor that didn't charge Washington sales tax. The use tax rate matches the sales tax rate for your location. Both sales tax and use tax are reported on the same combined excise tax return.
Federal taxes for Washington LLCs
Washington LLCs are taxed as pass-through entities by default, which means the business itself doesn't pay federal income tax. Instead, profits and losses flow through to the owners' personal tax returns. Each owner pays federal income tax on their share of the profits at their individual rate.
LLC owners who are active in the business also owe self-employment tax — currently 15.3% on net earnings up to the Social Security wage base, and 2.9% on earnings above it. This covers Social Security and Medicare contributions that an employer would otherwise split with an employee.
If your LLC elects S Corporation tax treatment, the rules change. You'd pay yourself a reasonable salary as a W-2 employee and pay payroll taxes on that salary. Distributions above the salary aren't subject to self-employment tax, which can reduce the overall tax burden for some LLCs. A tax professional can help you figure out whether an S Corp election makes sense for your situation.
Filing requirements and deadlines
Washington LLCs report and pay B&O tax, sales tax, and use tax on a combined excise tax return filed with the Washington Department of Revenue. Your filing frequency — monthly, quarterly, or annually — depends on the size of your tax liability. The Department of Revenue assigns your frequency when you register.
Quarterly returns are due on the 25th of the month following the end of each quarter. Annual returns are due April 30. Missing a deadline means interest and penalties on the unpaid amount, so it's worth setting calendar reminders well in advance.
For federal taxes, most LLC owners need to pay estimated taxes quarterly to the IRS — typically by April 15, June 15, September 15, and January 15. If you expect to owe $1,000 or more in federal taxes for the year, estimated payments are required. Getting behind on estimated payments can mean an underpayment penalty at tax time.
Quarterly excise tax return: due the 25th of the month after each quarter ends
Annual excise tax return: due April 30
Federal estimated taxes: due quarterly (April 15, June 15, September 15, January 15)
Register with the Washington Department of Revenue before you start collecting sales tax or conducting taxable business activity
FAQ
No. Washington does not have a personal state income tax, which means LLC owners don't pay state income tax on their share of business profits. This is one of Washington's more notable tax advantages for business owners. The state makes up for it through the B&O tax on gross receipts and the retail sales tax.
The B&O tax is a gross receipts tax imposed on the total revenue your LLC earns from business activity in Washington — not on profit. Rates vary by business classification: 0.471% for retailing, 0.484% for wholesaling, and 1.5% for services. Your LLC owes B&O tax even if it didn't turn a profit that year.
Yes. Washington has a 6.5% state retail sales tax. If your LLC sells taxable goods or certain services, you need to collect this tax from customers and remit it to the Washington Department of Revenue. Local jurisdictions add their own rates on top of the state rate, so the combined rate varies depending on where the sale takes place.
The use tax applies when your LLC uses, stores, or consumes goods in Washington and didn't pay sales tax on them at the time of purchase. A common example is buying supplies from an out-of-state vendor that didn't charge Washington sales tax. The use tax rate matches the sales tax rate for your location and is reported on the same combined excise tax return.
No. Washington does not have a franchise tax on LLCs. You won't owe an annual franchise tax just for the privilege of doing business in the state. The main ongoing state tax obligation for most LLCs is the B&O tax on gross receipts, reported through the combined excise tax return.
Yes. If you expect to owe $1,000 or more in federal taxes for the year, you need to make quarterly estimated tax payments to the IRS. The due dates are April 15, June 15, September 15, and January 15. Washington doesn't have a state income tax, so there are no state estimated income tax payments — but you do need to file your state excise tax return on schedule.
It depends on your business activity. Washington doesn't have a flat LLC tax rate. The B&O tax rate is 0.471% for retailing, 0.484% for wholesaling, and 1.5% for service businesses. On top of that, retail LLCs collect 6.5% state sales tax from customers. Federal income and self-employment taxes are separate and based on each owner's individual earnings.
File a combined excise tax return with the Washington Department of Revenue. This single return covers B&O tax, sales tax, and use tax together. You can file online through the Department of Revenue's My DOR portal. Quarterly returns are due the 25th of the month after each quarter ends. Annual returns are due April 30.
