For my last post on Washington taxes, I wanted to finish up with an overview of county and city laws when operating a photography business in Seattle.
As a business operating in King County, you are required to file a personal property tax affidavit. The King County Department of Assessments is responsible for assessing personal property that a business uses. King County’s Treasury Operations is responsible for mailing personal property tax statements and collecting the tax. Personal property typically includes items used by a company to conduct business. Generally, personal property does not include property which is attached to a building or to the land. After registering with a Washington State Business License, you must contact the King Department of Assessments to report your new business. Businesses that do not self report their personal property are subject to a penalty of up to 25 percent in the aggregate against the total tax liability by the Washington State Department of Revenue. Based on the information you provide, the assessed value of your company’s personal property is determined, and a valuation notice is sent. The assessed value for the current year becomes the basis for taxes due to the following year.
City of Seattle
When operating in the city of Seattle, your business is subject to the business license tax unless specifically exempted by the Seattle Municipal Code. Seattle maintains a general gross receipts business license tax and a gross receipts utility tax. The Seattle business license tax is applied to the gross revenue that businesses earn and is sometimes called the Seattle business and occupation tax (B&O tax) or gross receipts tax. Tax is due if your annual taxable gross revenue is $100,000 or more. If your annual taxable gross revenue is less than $100,000 or if you have no business activity for the year then you do not pay the tax. You are still required to report your gross revenue, even if zero, to the City of Seattle.
Click here to see tax rates and classifications. To calculate the amount that you pay, multiply your taxable gross revenue amount by the tax rate.
It is important to note that the Seattle business license tax is not the same as the Washington state B&O tax that I mentioned in previous posts. You must file your Seattle taxes separately from your state taxes.
After reviewing all of the different departments you need to interact with to be properly licensed within the state, you can understand why it is important to be knowledgeable and aware of all of the necessary steps you need to take to be a credible businesses. It may be easy to create your brand, but if you are not licensed properly it can hurt you in the end. Whether you are audited by federal, state, county, or city departments, or if another business or your clients chooses not to interact with you because you are not properly licensed.
How have you handled getting licensed?