Our services include federal taxes, state taxes and all local taxes, sales and excise taxes, as well as taxes related to payroll. We will help you determine to what tax authorities (federal, state and local) your business is accountable to and what tax forms you are supposed to file depending on your specific business activity and operations location. We will insure accurate and timely payment of all required taxes, and preparation and submission of all relevant tax returns. We will also calculate and remit all required estimated tax payments.
All companies that do business in the United States are required to file annual Federal tax returns. For the Federal taxation purposes a business can be a corporation or an entity with the so-called pass-through taxation (Partnerships, LLCs, S-Corporations, etc.). Corporations pay tax on the income that they earn during the year. In addition, the owners of corporations pay taxes on distributed profits (dividends). Businesses with pass-through taxation are not subjects to federal taxation at the enterprise level. Income that they earn is assigned to the business owners/shareholders, who are accountable for their shares of income in their personal tax returns. However, path-through entities are required to file annual information returns in which they repot the income of the company and the share of each co-owner. Only individual entrepreneurs (Sole Proprietors) are exempt from filing a separate business tax return. They report their business activities in a special form (Schedule C, form 1040), which is a part of their personal tax return.
Corporations must make regular estimated tax payments if the corporate income tax for the reporting period is expected to be $500 or more. Individual entrepreneurs and co-owners of entities with pass-through taxation should add their share of income from business activities to their income from other sources and make estimated tax payments on these amounts.
There are excise taxes reportable on the federal level. Typically those are taxes on the sales of products that are potentially damaging to the environment. Collection and remittance of these taxes is the responsibility of enterprises. Rules for collection of the excise taxes are the same for corporations and businesses with pass-through taxation. Excise taxes are remitted and reported at a separate schedule different from federal income tax reporting.
State governments license and tax businesses within their jurisdictions. Many states have income tax, collect sales tax and numerous excise taxes, contributions to employment security funds and oversee workman compensation programs.
There is no income tax in Washington State. There is business and occupation (B&O) tax, however, which is levied on gross income from business conducted in the state. The rate of this tax depends on business activity.
Sales tax is collected on all retail sales of tangible personal property unless specifically exempt. It is important to remember that some services are treated as retail sale and are subject to sale tax.
Washington Department of Revenue collects statewide sales tax of 6.5% and additional sales tax on behalf of local governments. The rate of local sales tax depends on the location where the buyer takes possession of the merchandise. The seller is responsible for tracking and reporting total sales by location code that local sales tax can be accurately distribute to the cities and counties on which behalf it was collected.
Similar to other states, WA collects various excise taxes. Examples include taxes on Lodging, sales of Tobacco Products and Hazardous Substance among some other.
Yet another type of tax that the WA imposes is a property tax. Real property and personal property used for business is a subject to this tax.
Even businesses with pass-trough through taxation should report B&O, sale and excise taxes at the level of the enterprise as a whole, rather than at the level of each owner. These taxes are remitted and reported at a schedule prescribed by WA Department of Revenue depending on the type of business and the volume of operations. Reports on monthly, quarterly or annual basis can be requested.
Businesses that hire employees are responsible for employment related taxes. The employer must register at the federal level and in various state agencies. At the federal level the employers withhold income tax and employee portion of social security and Medicare contributions (FICA). Amounts withheld along with employer share of FICA contributions are remitted to IRS on a prescribed schedule. At the state level, employers pay taxes to the employments security fund. State governments also oversee the payment of insurance covering occupational diseases and injuries in the workplace (Workmens' Compensation). Payments for Workmens' Compensation is the responsibility of employers.
Local governments can also collect business taxes. Typically in is done in a form of annual registration fee. Some larger cities (e.g. Bellevue, Tacoma), however, impose taxes on gross receipts similar to WA B&O tax.
A short review above shows that business done in Washington State is subject to a large number of taxes on different levels all with different rates and collection schedules. Recruiting professional help typically saves a lot of valuable time and substantial amount of noncompliance fees.