Washington LLC Taxes

LLC Pass-Through Taxation

By default, LLCs don't pay taxes directly. Instead, the LLC members report the income (or losses) on their personal Form 1040 tax return. This is called pass-through taxation — tax responsibility "passes through" the LLC to its owners.

How Are LLCs Taxed in Washington?

By default, a Washington LLC is taxed by the IRS based on the number of members:

• An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship
• An LLC with 2+ owners (Multi-Member LLC) is taxed like a Partnership

These are the "default" statuses — automatically applied based on member count. You can also elect to have your LLC taxed as a Corporation (S-Corp or C-Corp) by filing extra paperwork with the IRS.

Single-Member LLC (default)

The IRS treats Single-Member LLCs as Disregarded Entities — the LLC doesn't file its own federal return. Instead, the owner reports LLC income on their personal Form 1040 (Schedule C if owned by an individual).

Multi-Member LLC (default)

Multi-Member LLCs file a Form 1065 Partnership Return and issue a Schedule K-1 to each member. Each member then reports their share of profits on their personal Form 1040.

Husband & Wife LLC

Electing Corporate Taxation

• S-Corporation: File Form 2553 with the IRS. Can reduce self-employment taxes once the LLC has consistent profits (generally $70,000+ net income per member). Speak with an accountant first.
• C-Corporation: File Form 8832 with the IRS. Uncommon for small LLCs. Primarily useful for large employers offering healthcare fringe benefits.

Washington State Income Tax

Good news — Washington does not have a state-level personal income tax. You do not need to file a state income tax return for your Washington LLC.

Washington has no state personal income tax. However, Washington imposes a Business & Occupation (B&O) Tax on LLCs — see below.

Washington Special LLC Taxes

Washington Business & Occupation (B&O) Tax

Washington's Business & Occupation (B&O) Tax is imposed on the gross income of virtually all Washington businesses — regardless of profit. Rates vary by business activity:

• Retailing: 0.471%
• Services: 1.5%
• Manufacturing: 0.484%
• Wholesaling: 0.484%

There is no deduction for cost of goods or operating expenses — the B&O tax is on total gross revenue. Small businesses with annual gross revenue under $125,000 may qualify for a small business credit that eliminates the B&O tax.

Local Income Tax

You and/or your LLC may also need to file and pay income taxes with your local municipality (city, county, etc.). Contact your local government or hire an accountant to confirm local requirements.

Washington Sales Tax

If your LLC sells taxable products (and sometimes services) in Washington, you may need to collect sales tax and register for a Seller's Permit (also called a resale license or sales tax permit).

Washington's state sales tax rate is 6.5%. Local rates add 0.5%–3.9%, bringing most combined rates to 8.5%–10.4%.

Register for Washington Seller's Permit →

Contact the Washington State Department of Revenue at 360-705-6705 with questions.

Washington LLC Payroll Taxes

If your Washington LLC has employees, you must handle payroll taxes, which include:

• Federal income tax withholding
• Washington state income tax withholding (Washington has no state income tax withholding)
• Social Security and Medicare taxes (FICA)
• Federal unemployment tax (FUTA)
• Washington state unemployment tax (SUTA)

Payroll calculations are complex — most LLC owners hire a payroll service or accountant.

Washington Tax Agency Contact

Washington LLC Taxes — FAQs