A fine is a tax for doing something wrong. A tax is a fine for doing something right.
~ Lowell Nussbaum
As a Washington business owner, you’ve probably heard of Business & Occupation, or B&O, taxes before (if you don’t own a business then no worries, you don’t have to pay B&O taxes!). The good news is that two of the three local taxes in Washington State are based on a percentage of your business’s revenue, which in theory means that with proper planning, you’ll have the wherewithal to pay them. The three local taxing jurisdictions we will talk about today are City Taxes, County Taxes, and State Taxes.
Washington State taxes operate in a similar way to your city taxes, though state taxes are more complex due to a higher number of tax categories and more types of deductions.
Like Seattle city taxes, your filing frequency for Washington State B&O depends on your expected annual revenue. The due dates are not as consistent though. For monthly filers, taxes are due on the 25th of every month. Quarterly filers must submit returns by the last day of the month after the quarter end (April 30th, July 31st, October 31st, and January 31st). Note that in 2020 the annual due date changed from January 31st to April 15th. It’s still good to file early though, since your 1040 is also due that day.
Important note: Washington State and your city will send you a letter after you file if you are an annual filer or if your filing status changes. If you receive one of these letters, we need it as soon as possible!
County Property Taxes
County taxes are (presumably) based on the assumption that property generates revenue. This can be a problem, because the tax due is a percentage of the value of the property. Year after year, you will likely owe about the same amount on property tax, unless your property value is updated (in which case your tax will probably increase).
It is easy to see that business owners can really feel the pinch if their property value is updated prior to a bad year (taxes are based on the value of the property as of December 31st of the previous year). You can use King County’s parcel viewer to track the value that the county has assessed for your property so you aren’t surprised to see how much you owe next time around.
The due dates for property tax are simple: April 30th and October 31st of every year. Plus, the county tells you how much you owe so there’s no calculation necessary. If at any point you have a very compelling argument that your property should be a significantly different value than it is on the official books, you can dispute the value, though this is a lengthy process that is outside the scope of this article.
City Taxes Within Washington
Seattle, Bellevue, and many other cities across Washington require businesses to file for B&O taxes on a periodic basis depending on their estimated annual income; regardless of the frequency, city taxes are always due on the last day of the month. Monthly filers of course file every month. If you file quarterly, your return is due in April, August, October, or January (the month after the quarter ends). Annual filers’ returns are due January 31st each year.
City taxes are based on your revenue. Many Washington State cities such as Seattle, Bellevue, and Tacoma use the FileLocal website for B&O taxes, a convenient way to pay.
Each city sets up its own city taxing scheme, but let’s look at Seattle specifically for an example. Seattle businesses must file for B&O taxes on a periodic basis depending on their estimated annual income (which is based on the previous year’s income). While they can be annual, quarterly, or monthly, the taxes are always due on the last day of the month. Quarterly filings are due in April, August, October, or January (the month after the quarter ends). Annual filers’ returns are due January 31st each year.