New Business Tax Basics - Washington Department of Revenue

New Business Tax Basics

Contents

Business tax basics . . . . . . . . . . . . . . . . . . .1

Your rights and responsibilities . . . . . . . . . . . 2

Registering with the Department of Revenue . . 2

Helpful hints . . . . . . . . . . . . . . . . . . . . . . . 3

Business and occupation (B&O) tax . . . . . . . . .4 B&O tax rates . . . . . . . . . . . . . . . . . . . . . . . . 4 Major B&O tax classifications . . . . . . . . . . . . . . 4 Economic nexus . . . . . . . . . . . . . . . . . . . . . . 5 Exemptions, deductions and credits . . . . . . . . . 6

Reseller permit . . . . . . . . . . . . . . . . . . . . . .8

Retail sales tax . . . . . . . . . . . . . . . . . . . . . .9 Other taxes collected . . . . . . . . . . . . . . . . . . 10 Rental of tangible personal property . . . . . . . . 10 Tools to determine sales tax rates and codes . . . 11 Retail sales tax deductions . . . . . . . . . . . . . . 11

Use tax . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Use tax exemption and credit . . . . . . . . . . . . . 13 Report and pay use tax . . . . . . . . . . . . . . . . . 13

Public utility tax . . . . . . . . . . . . . . . . . . . . 14

Special taxes and fees . . . . . . . . . . . . . . . . 15

Tax incentives . . . . . . . . . . . . . . . . . . . . . . 17 General manufacturing . . . . . . . . . . . . . . . . . 17 Aerospace . . . . . . . . . . . . . . . . . . . . . . . . . 17 Biofuel . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Food processing . . . . . . . . . . . . . . . . . . . . . 18 Other incentives . . . . . . . . . . . . . . . . . . . . . 18

Personal property tax . . . . . . . . . . . . . . . . . 19

Tax return payment and reporting . . . . . . . . 20 Accounting methods . . . . . . . . . . . . . . . . . . 20 Paying your taxes . . . . . . . . . . . . . . . . . . . . 20 Due dates . . . . . . . . . . . . . . . . . . . . . . . . . 20 Electronic filing (My DOR) . . . . . . . . . . . . . . . 20 Reporting no business activity . . . . . . . . . . . . 20 Correcting a previously filed return . . . . . . . . . 21 Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Audit process . . . . . . . . . . . . . . . . . . . . . . 22

Appeals process . . . . . . . . . . . . . . . . . . . . 23

Services and resources . . . . . . . . . . . . . . . . 23 Contacts for specific taxes and programs . . . . . 24 Other agencies to contact . . . . . . . . . . . . . . . 25

Appendices . . . . . . . . . . . . . . . . . . . . . . . 26 A Combined excise tax return . . . . . . . . . . 27-28 B Multiple activities tax credit . . . . . . . . . . 29-31 C Reseller permit . . . . . . . . . . . . . . . . . . . . 32 D Confidential tax authorization . . . . . . . . . . 33 E Tax inquiry statement . . . . . . . . . . . . . . . . 34 F Buyers' retail sales tax exemption

certificate . . . . . . . . . . . . . . . . . . . . . 35-39 G Common business activities table . . . . . . 41-44

Local office locations . . . . . . . . . . . . . . . . . 46

Business tax basics

This basic tax guide is created to help you understand Washington's tax structure. It's intended to provide an overview of the taxes that apply to various business activities in Washington. Washington does not have a corporate or personal income tax. Most Washington businesses are subject to three major state taxes, all administered or overseen by the Department of Revenue: 1. Business and occupation tax (B&O) 2. Retail sales tax 3. Use tax Other taxes may apply to your business, such as: Public utility tax Specialty taxes County and city taxes

Reminder State tax laws change regularly. The information provided is current at the time of the publication.

Questions Specialists are available to answer your tax questions Monday through Friday from 8 a.m. to 5 p.m.

Call: 360-705-6705 Live Chat: Go to dor., click Contact then click on the Live Chat icon.

Resources Go to dor., then click Get a Form or Publication Industry-specific tax guides Special Notices Tax Topic articles

More services Information on other services and publications can be found at the back of this publication or on our website at dor..

Where the money comes from (in billions):

$4.2 Business and occupation tax

0.4 Other local revenues

$3.2 Other state taxes and fees

$11.0 State retail sales and use tax

$2.8 State share property tax

$4.9 Local retail sales and use tax

$11.0 $4.9 $2.8 $3.2 $4.2 $0.4

State retail sales and use tax Local retail sales and use tax State share property tax Other state taxes and fees Business and occupation tax Other local revenues

$26.5 Total state taxes

dor. | 360-705-6705

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