Running a business in Washington or Oregon comes with specific tax considerations that national guides often miss. Here is what PNW business owners need to know.
Washington has no personal income tax and no corporate income tax. But it does have the Business and Occupation tax, which is a gross receipts tax. You pay B&O tax on total revenue, not profit. Even if your business is losing money, you still owe B&O tax if you have revenue.
The most common mistake: Washington business owners who move from another state often assume the absence of income tax means fewer tax obligations. B&O tax on gross receipts can be a surprise if you are not expecting it.
Oregon has a personal income tax with rates up to 9.9%, plus a Corporate Activity Tax on businesses with Oregon commercial activity above $1 million. But there is no sales tax, which simplifies things for retail and e-commerce businesses selling into Oregon.
If your business has employees or contractors working in another state, you may have created tax nexus there, meaning you have filing and possibly tax obligations. This is especially relevant for PNW businesses with remote workers in California or Texas.
Washington has state sales tax at 6.5%, with additional local rates that vary by city and county. Businesses selling into Washington may have economic nexus obligations even without a physical presence, particularly after the Supreme Court ruling in South Dakota v. Wayfair.
Schedule a free consultation and we will assess your specific situation, which states you have exposure in and what needs to be done about it.
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