Washington LLC Taxes: The Complete Filing Guide (2025)

Washington LLC Tax Basics

Navigating your Washington LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain Washington’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.

Use the links below to jump directly to the section you need:

• Washington LLC Taxes at a Glance
• Understanding LLC Taxation Basics
• Federal Tax Obligations
• Washington State Taxes
• Local Tax Considerations
• Tax Calendar and Filing Tips
• Tax Strategies for Washington LLCs
• Forms and Resources

Washington LLC Taxes at a Glance

Tax Type	Rate	Filing Deadline	Forms Required
Federal Income Tax	10-37% (personal brackets)	April 15, 2025	Form 1040 + Schedule C or Schedule E/K-1
Self-Employment Tax	15.3%	April 15, 2025	Schedule SE
Washington Business & Occupation Tax	0.138%-1.5%	Quarterly (Apr 15, Jul 31, Oct 31, Jan 31)	Combined Excise Tax Return
Federal Payroll Taxes (If Employees)	7.65% employer + 7.65% employee (FICA)	Quarterly (April 30, July 31, October 31, January 31)	Form 941
Washington Unemployment Tax (If Employees)	0.24%-6.12%	Quarterly	Filed online
Federal Unemployment (FUTA)	6% on first $7,000 per employee (0.6% after credits)	January 31, 2026 (annual)	Form 940
Sales & Use Tax	6.5% (+ up to 4.1% local surtax)	Monthly, quarterly, or annually based on sales volume	Filed online
Annual Report	$70  fee	Due by LLC formation anniversary	Filed online

Understanding LLC Taxation Basics

How Washington LLCs Are Taxed By Default

Your Washington LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.

Here’s how it works:

1. Your LLC earns income from business activities
2. The LLC itself files no tax return (unless you elect otherwise)
3. Profits “pass through” to members based on ownership percentage
4. Each member reports their share on their personal tax return
5. Members pay tax at their individual income tax rates

What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.

Tax Classification Options

While pass-through taxation is the default, your Washington LLC can choose alternative tax treatments:

Default LLC Tax Status:

• Single-member LLC: Taxed as a sole proprietorship
• Multi-member LLC: Taxed as a partnership

Optional Tax Classifications:

• S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
• C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)

Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.

Federal Tax Obligations

Income Tax

As a Washington LLC owner, you’ll report your share of business profits on your personal tax return using:

• Form 1040 + Schedule C (single-member LLCs)
• Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)

Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).

Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.

Self-Employment Tax

LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.

Key points:

• Applies to net earnings of $400 or more
• Calculated on Schedule SE
• You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income

What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.

Employment Taxes

If your LLC has employees, you must:

• Withhold federal income tax
• Pay and withhold FICA taxes (7.65% each for employer and employee)
• Pay federal unemployment tax (FUTA)
• File quarterly employment tax returns (Form 941)
• Provide W-2 forms annually

Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)

Estimated Tax Payments

Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.

Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.

Key deadlines:

• April 15
• June 16
• September 15
• January 15

Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.

Washington State Taxes

Washington Business & Occupation Tax

Washington imposes a Business & Occupation (B&O) tax on your LLC’s gross receipts from business activities in the state. The rate ranges from 0.138% to 1.5% and depends on what type of work your LLC performs.

Filing requirements:

• Use the Combined Excise Tax Return
• Due quarterly (April 15, July 31, October 31, January 31)
• File online through My DOR

Sales and Use Tax

If your Washington LLC sells physical products or certain services:

• Collect 6.5% sales tax (plus any applicable local surtax)
• Register for a sales tax permit through the Washington Department of Revenue 
• File and pay collected taxes monthly, quarterly, or annually based on sales volume
• Due dates follow your assigned filing frequency 

60-Second Check: Do I Need to Collect Sales Tax?

• Do you sell physical products in Washington? → If yes, collect tax
• Do you sell digital products? → Generally not taxable
• Do you provide services? → Most services are exempt 
• Do you sell online to Washington customers? → If yes, collect tax

Services typically exempt from sales tax include:

• Professional services (legal, accounting)
• Personal services (haircuts, fitness training)
• Medical services

Products typically subject to sales tax include:

• Tangible personal property
• Prepared food
• Some digital products

Unemployment Insurance Tax 

If you have employees in Washington, you will be responsible for paying state unemployment insurance tax on their wages.

• Register through the Employment Security Department
• Rates range from 0.72% to 6.12%
• New employers pay 90% of the average rate for their industry
• Due quarterly

Annual Report Filing

While not a tax, your Washington LLC must file an annual report in order to stay active and in good standing with the state.

• Due by the anniversary date of your LLC’s formation
• $70 filing fee
• File online with the Washington Secretary of State

Calendar Alert: Set a reminder to ensure you don’t miss this easy but required filing.

Local Tax Considerations

Local Sales Taxes

Washington allows cities and counties to impose local sales taxes on top of the state’s 6.5% base rate.

Cities with local sales taxes include:

• Lynnwood (10.6%)
• Vancouver (8.8%)
• Mill Creek (10.6%)
• Seattle (10.35%)
• Tacoma (10.3%)
• 100+ other Washington cities and counties

Filing requirements:

• You do not need to file separately with each city or county
• Local sales taxes are reported through the Combined Excise Tax Return
• File and pay through My DOR (electronic filing is mandatory)

Property Taxes

If your LLC owns real property in Washington:

• Rates vary by locality
• Assessed annually
• May qualify for various exemptions based on business type
• Personal property tax may apply to business equipment

Tax Calendar and Filing Tips

Key Deadlines for Washington LLCs

January:

• January 15: Final estimated tax payment for previous year
• January 31: Fourth quarter Washington UI tax due
• January 31: Issue W-2s/1099s to employees/contractors
• January 31: Fourth quarter federal payroll tax payment due 

April:

• April 15: First quarter B&O tax return due
• April 15: Federal income and self-employment tax returns due
• April 15: First quarter estimated tax payment due 
• April 30: First quarter federal payroll tax payment due
• April 30: First quarter Washington UI tax due

June: 

• June 16: Second quarter estimated tax due 

July: 

• July 31: Second quarter B&O tax return due
• July 31: Second quarter Washington UI tax due
• July 31: Second quarter federal payroll tax payment due 

October:

• October 31: Third quarter B&O tax return due
• October 31: Third quarter Washington UI tax due
• October 31: Third quarter federal payroll tax payment due

Record-Keeping Checklist

Keep these records for at least seven years:

• Business income records (invoices, receipts)
• Expense receipts and documentation
• Bank and credit card statements
• Asset purchase and improvement records
• Vehicle mileage logs
• Home office documentation
• Payroll records
• Previous tax returns

Tax Strategies for Washington LLCs

S Corporation Election Benefits

Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:

1. File Form 2553 with the IRS
2. Pay yourself a “reasonable salary” subject to employment taxes
3. Take remaining profits as distributions exempt from self-employment tax

Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.

Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.

Business Expense Deductions

Common deductions Washington LLC owners often overlook:

• Home office deduction
• Business mileage (70¢ per mile for 2025)
• Health insurance premiums
• Retirement plan contributions
• Professional development expenses
• Business meals (50% deductible)

Forms and Resources

Federal Tax Forms

• Schedule C: Profit or Loss From Business (sole proprietors)
• Form 1065: U.S. Return of Partnership Income
• Schedule K-1: Partner’s Share of Income, Deductions, Credits
• Form 1120-S: U.S. Income Tax Return for an S Corporation
• Form 2553: Election by a Small Business Corporation (S Corp)
• Form 8832: Entity Classification Election

Washington Tax Forms

• Combined Excise Tax Return: Business & Occupation tax and sales & use tax
• Quarterly Wage Report: Washington Unemployment Insurance tax

Helpful Resources

• Washington Department of Revenue
• My DOR
• Internal Revenue Service
• Washington Secretary of State