Gross Receipts B&O Tax

whats the business and occupation tax rate for bookkeeping services in washington

The City does not acknowledge a distinction between wholesale and retail for Business & Occupation Tax purposes. Report revenue under Tour Operator if you purchase travel services (lodging, meals, transportation, etc.) and resell them to consumers. As a tour operator you, not the consumer, are liable for the purchase. Processors for hire do not own the materials used in the manufacturing process.

Is there business income tax in Washington State?

Washington State does not have a corporate or personal income tax. However, Washington businesses generally are subject to the following: Business and occupation (B&O) tax. Retail sales/use tax.

Businesses that have historically reported gross receipts under the Service and Other Activities classification and have gross income in excess of $1 million in 2019 should be aware that they may be subject to the increased tax rate of 1.75%. Also, affiliated businesses with members engaging in advanced computing activities should consider whether they are subject to the Workforce Education Investment Surcharge of 1.22% if they have more than $25 billion in worldwide gross revenue. A single tax rate of 7% would apply to all levels of such income that exceed the standard deduction of $250,000. The standard deduction of $250,000 is available for each individual and married couple, and spouses who file joint returns for federal purposes are required file the same for purposes of the Washington Capital Gains tax. There are some limited exceptions to the tax, which includes real estate, as well as interests in certain qualifying entities owning real estate.

Physical presence nexus-creating activities

The Wholesaling B&O tax rate is 0.484 percent (0.00484) of your gross receipts. This tax classification applies to you if there are sales (or rental) of goods and certain services to customers. The Retailing B&O tax rate is 0.471 percent (.00471) of your gross receipts. Its primary tax on business activities is the B&O tax, which is a gross receipts excise tax on the privilege of engaging in business activities. However, there are significant issues with the apportionment of business services that do not relate to real or tangible personal property. Most perplexing is the example of a law firm defending a manufacturer in a product liability suit.

Filing your extension is easy by using IRS Free File (available here), which can guide you through the tax options if you have an AGI of 73,000 or less. For those with an AGI that is higher, then you can find forms that won’t do the free guidance, but will still give you all the information you need. Washington State has 3 different late fee options depending on how delinquent your taxes are.


The way it works out is that if your gross income is under a certain amount, you pay no B & O tax. As your income goes up, you get a smaller and smaller credit, until you make enough to pay the full percentage. So, for example, if you pay Service/Other B & O annually, and your annual business income is $56,000, this gross income is tax-free. If you’re in the manufacturing category, you won’t have to pay B & O tax until your annual income is at about $86,000, with a sliding scale after that. While the claim that we don’t have an income tax is technically true, you pay the B&O tax on your gross income. This means you pay taxes on the total amount of revenue you pull in for your business, whether you make a profit or not.

whats the business and occupation tax rate for bookkeeping services in washington

This is separate from the federal, state, and local taxes that you pay. We recommend hiring an accountant to prepare and file your local income taxes. This means you don’t have to file a state-level income tax return for your Washington LLC income if you have a Single-Member or Multi-Member LLC. The excise tax return due dates are listed here for future reference, but the 2022 excise tax return due date is listed here. Businesses aren’t out of the clear yet, because businesses are subject to the Business and Occupation taxes which are calculated based on gross income.

Are There Credits for B&O Tax?

Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see /about to learn more about our global network of member firms. If you qualify, the Department of Revenue provides worksheets to figure out how much your Small Business Tax Credit will be for monthly, quarterly, and annual taxpayers. Washington businesses can use the Employer Account Management Services (EAMS) portal to pay unemployment tax liabilities.

whats the business and occupation tax rate for bookkeeping services in washington

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