Hiring your first employee in Washington

What do you have to register for before your first payroll?

Washington has one front door. The Business License Application you file with the Department of Revenue is what opens your workers compensation account at Labor and Industries and your unemployment account at Employment Security at the same time, so you do not register with each agency separately. File it no sooner than 90 days before your first hire, and expect each agency to write to you afterward with its own account number and filing instructions.

Does Washington require income tax withholding?

No. Washington does not tax wage income, so there is no state withholding account to open and nothing to deduct from a paycheck for the state.

Washington has no personal income tax, so there is no state withholding account and nothing to take out of a paycheck for state income tax. Federal withholding still applies, and you still open state payroll accounts, they are just for unemployment, workers compensation, paid leave and long-term care instead. One thing to watch: the 2026 Legislature passed a tax on individual income above $1 million effective January 2028, with first returns due in 2029, and guidance has not yet been published.

What unemployment insurance does Washington charge a new employer?

Washington does not publish one new employer rate, so the figure depends on your industry. There is no single new employer rate to quote. A new employer pays 115% of the average rate for all businesses in its industry, with a federal floor of 1%, and stays on that industry rate for roughly two and a half to three years before its own layoff history takes over. Tax is owed on the first $78,200 of each employee's wages in 2026, up from $72,800 in 2025 and rising to $82,000 in 2027, so this figure is reset every January and is among the highest wage bases in the country.

Do you need workers compensation insurance in Washington?

Yes, from your first employee. Washington sets no headcount to reach, so there is no free window before coverage is required.

Washington is a monopoly state fund state: you cannot buy a policy from a private insurer, you either buy coverage from Labor and Industries or get certified to self-insure. Coverage is required as soon as you hire, and you open the account through the same Business License Application rather than shopping for a quote. Premiums are charged per hour worked rather than as a percentage of payroll, at a rate set separately for each of 327 risk classifications, so no single rate exists. Washington is also the only state where workers pay a meaningful share of the premium, on average about 24%, which you withhold from their pay.

How quickly must you report a new hire in Washington?

Within 20 days of the date of hire or rehire. Reports go to the Washington Department of Social and Health Services, Division of Child Support.

Report every newly hired and rehired employee within 20 days of hire. This is a different obligation from your quarterly wage reports to Employment Security and Labor and Industries, and it repeats for every single hire even though the account setup only happens once. A rehire after a break in service counts again.

Does Washington have paid family leave or state disability insurance?

Washington runs two separate payroll deductions that catch new employers out. Paid Family and Medical Leave costs 1.13% of gross wages in 2026 up to the Social Security cap, split so the employee pays up to 71.43% of it and the employer the remaining 28.57%, but only employers averaging 50 or more employees owe the employer share. On top of that, the state long-term care programme takes 0.58% of gross wages with no cap at all and is entirely employee paid. You collect both and file them on one combined quarterly report, and if you forget to withhold a premium you cannot go back and recover it from the employee later.

Do you need a sales tax permit in Washington?

Washington does not issue a standalone sales tax permit. You register for retail sales tax and the business and occupation tax together by filing one Business License Application, which returns a Unified Business Identifier and a tax registration endorsement. The processing fee is $50 to open the first location of a new business, or $10 if you already hold a Washington licence and are filing for another purpose such as hiring employees.

Does a marketplace like Amazon or Etsy handle the tax for you?

Washington puts the collection duty on the marketplace facilitator rather than on you for sales it facilitates. If all your Washington sales run through a facilitator that is collecting, you do not collect the tax yourself, but keep the facilitator's monthly gross sales report as proof. The trap is the business and occupation tax: those marketplace sales are still your gross receipts, so you may still have to register, report them under retailing, and then claim a deduction for the amount the facilitator remitted.

If your sales drop, when can you stop collecting?

Washington keeps you registered after you stop. A person who meets a nexus test in a calendar year is deemed to have nexus for the whole of the following calendar year as well, even if the activity that created it ended on January 1. The Department applies that same one year trailing period to retail sales tax and to everything else on the combined excise tax return, so plan to keep filing through the trailing year and then formally close the account rather than simply going quiet.

Does Washington charge a tax on revenue rather than profit?

The B&O tax stands in for a corporate income tax and it is charged on gross receipts, with no deduction for cost of goods, payroll or any other expense, so a thin margin business can owe it in a year it loses money. Your rate depends entirely on which of more than 50 classifications your activity falls into, and the spread is wide. A retailer pays B&O on the same sale it collects retail sales tax on, so these are two separate obligations reported on one combined return. A small business credit can reduce or wipe out the tax for very small filers, but it never removes the duty to register and file.

Do you have to register your out-of-state company in Washington?

$180 for both foreign LLCs and foreign profit corporations, plus an online processing fee at checkout. Expedited service is an additional $100. Separate from the Department of Revenue business licence fee.

Registering with the Secretary of State is a different step from the Department of Revenue business licence, and doing one does not do the other. You will need a current certificate of existence from your home state plus a Washington registered agent. Once the Secretary of State filing clears, you still file the Business License Application with Revenue to get your Unified Business Identifier and tax registration.

Where these figures come from

Every number on this page was read on Washington's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.