Sales & Use Taxes (Washington State)

If you're a business owner, it's important to be aware of the rules around sales tax and use tax, even if you aren't selling a retail product. Here's an overview (but please work with an accountant for your specific situation).

[@interdimensionaleagle6685]

Found this helpful, thanks for making this video.

[@IPv6Freely]

The hardest part is when you get to the point where you have to enter amounts for city/county. Took me hours and hours to figure that out, and multiple tries to get the amounts to equal out on the DOR site.

[@abellatax]

Yes, especially if you're tracking everything on paper (helps to always list the location code on the invoice), or if you're using QBO's automated sales tax calculation feature (which shows duplicate locations (usually counties) on the Sales Tax Liability Report. It's worth the time to make sure whatever system you're using streamlines that reporting as much as possible.

[@cyramclennan2580]

I have barely started my business but I feel so scared to move forward because of taxes and I'm not the best at record keeping and holding onto the receipts for purchases for my business. Starting up is one of the most complex parts. I'm just so scared to mess up and get my business in trouble before even getting it started. Been trying to find some advice but being a business owner can be really lonely. So sorry for the negativity ❤ I'm just really struggling

[@abellatax]

Being a business owner does add a lot of administration to your plate, and I know it's a challenging time to get in with an accountant for advice, at the height of tax season, but it should be easier after April 15. In the meantime, if you haven't already, set up a separate bank account for your business and be sure to use that account for all business income/expenses. It'll keep things cleaner for you than mixing in your personal account. Hang in there!

[@cyramclennan2580]

@@abellatax thank you so much! I do have a business bank account so at least I'm doing something right. Thank you

[@larrybrewer8771]

If we as a small business in WA state have been always paying sales tax for a lot of years just now getting a reseller permit. Is there any way of getting refunded for some of the sales tax. I know now that we have been getting double taxed did not know that then.

[@abellatax]

You can amend four years of filings, plus the current year, to take the Sales Tax Paid at Source deduction. Be sure to keep complete and careful records.

[@seanvassar1117]

I can't find where or how to pay sales tax. I have filled with DOR but don't see the sales tax? Im a small start up constrution company only have had one location for this last quarter.

[@abellatax]

When you complete your DOR filing, make sure you're reporting your income as Retail income. It won't let you get through the screens without choosing the location and calculating sales tax. If you're entering it as Service income instead, that might be the problem.

[@seanvassar1117]

@@abellatax thanks for the fast response! That might have been the issue, Ill see if I can edit to retail.

[@lidya1894]

Hi ! I own a decor /party rentals business, and I started last year. Is it ok to use my resale tax when i buy material, like paint, wood , printer machines , flowers, and more for the decor ? I need to charge customers for each decor and pay these taxes every quarter on my DOR? For example, i bought a laser, which i use for my decor needs , i used my permit , and now, all the time I create a laser cut for a decor for clients i charge taxes . Please help. I am very confused 😕 Am i allowed to buy machineries or miscellaneous items i use with my installation using this permit ? What about items that i am renting out to clients ? I just got started, and i want to do things right Thank you very much !

[@abellatax]

Sorry for the delay! No, you aren't able to use the reseller permit for equipment like the laser or for things that you're using to run your business. It can only be used for items that you're essentially selling to your clients. dor.wa.gov/taxes-rates/retail-sales-tax/reseller-permits You can also reach out to DOR for written clarification if you have questions, so that you have something to rely on.

[@user-hg6mr2id4q]

If you sell trade in products do you not count those items in your sales tax number when resold?

[@abellatax]

You would still be charging sales tax on those sales and reporting the full sales price to the state. You're welcome to request written guidance from the state if you have an unclear situation: dor.wa.gov/contact/request-tax-ruling-0

[@user-pg1nl1gj5w]

Hello thank you for your video.i have a question.if i buy a coffee and resale it to coffe shops what kind of bussines licenses i do need please advice. I have LLC and EIN.

[@abellatax]

Assuming you're located in WA State, you'd need your state (and possibly city) business licenses and reseller permit. The state business license process should alert you if there are specialty licenses needed.

[@larrybrewer8771]

What is source deduction

[@abellatax]

It's a deduction allowed for the sales tax you paid on products/services that you have resold and collected sales tax on again. So if I buy a $10 widget and pay $1.06 sales tax on it, and sell the widget for $12 and collect $1.27 in sales tax, my DOR filing would show $12 in sales for B&O tax purposes, $12 in sales for retail sales tax purposes, and a deduction for $10 for sales tax paid at source. My tax bill would be 1.27 - 1.06 = 0.21.

[@wildflower1335]

How does a small business charge a customer, when we made an "online purchase" where we already paid Washington sales tax? I could really use your advice, please. When we find a product online that we purchase for a customer… we pay sales tax. How do I invoice that, as “my understanding” is I must tax ALL customers for ALL purchases & services, double charging sales tax?

[@abellatax]

Welcome! Yes, you still charge your customer sales tax, but when you file with WA DOR, you take the Sales Tax at Source deduction to deduct the sales tax you already paid. dor.wa.gov/taxes-rates/retail-sales-tax/reseller-permits/taxable-amount-tax-paid-source-deduction

[@victorghernandez6848]

Where are you located?

[@abellatax]

Lynnwood, WA

[@wildflower1335]

I just subscribed 🙏🙏 Our accountant is not familiar with the situation.🤦🏼‍♀🤦🏼‍♀

[@groundpounder21]

All these videos never talk about the types of exemptions. smh

[@abellatax]

Thanks for the feedback. Do you mean product based exemptions from sales tax like prescriptions, certain bakery items, etc., or something else? WA's deductions and exemptions are very narrow and don't apply to most businesses. I'd be happy to put together a follow-up video with more detailed info, but I'm not sure what you're looking for.