Ecommerce Requirements for Washington Businesses

Washington Business Licensing

Forming your LLC creates a legal entity — it doesn't license the business. Selling online in Washington typically starts with the same step as any other business: a Business License Application with the Department of Revenue, which also registers you for state tax reporting. Many cities also require their own business license on top of the state one. Common registrations and responsibilities for a new Washington online store include:

Retail Sales Tax

Most new online stores sell physical products, and most retail sales of products are subject to Washington's retail sales tax. You collect this tax from your customer at checkout and send it to the Department of Revenue with your excise tax return — you're collecting the state's tax, not paying it out of your own pocket. Rates vary by location, and which rate applies depends on where the item is shipped (see destination-based sales tax below).

Business & Occupation (B&O) Tax

Washington also taxes most businesses on their gross income through the business & occupation (B&O) tax. Online stores usually report under the retailing classification. The part that surprises beginners: B&O is calculated on your gross receipts — your total sales before expenses — not your profit. You report it on the same excise tax return as your sales tax.

Destination-Based Sales Tax

Washington is a destination-based sales tax state for online sales. For an item you ship to a Washington customer, the sales tax rate is based on where the customer receives it — usually their delivery address — not where your business is located. In practice, a sale shipped to Spokane uses the rate that applies in Spokane. If you sell through your own website with a shopping cart, your checkout needs to apply the destination rate.

Selling Through Your Own Website

When you sell through your own website, your LLC is the seller: you register with the Department of Revenue, collect sales tax at the destination rate, keep records of every sale, and file excise tax returns on the schedule DOR assigns you (monthly, quarterly, or annually, depending on your sales volume). Keep good records from your very first sale — the bookkeeping step of your roadmap covers the basics.

Selling Through Marketplaces and Marketplace Facilitator Rules

Amazon, Etsy, eBay, and similar platforms are marketplaces, and Washington's marketplace facilitator rules change who handles sales tax. A marketplace facilitator is a business that operates a marketplace and contracts with third-party sellers. Under Washington rules, the facilitator — not you — is generally responsible for collecting and remitting the retail sales tax on sales made through the marketplace.

You may still owe B&O tax on your marketplace income, and facilitators must give their sellers a monthly report of Washington gross sales made on their behalf — use that report when you file.

Reseller Permits

When you buy inventory you plan to resell, a reseller permit lets you purchase it without paying retail sales tax at purchase — because your customers will pay the tax when they buy from you. Permits are issued by the Department of Revenue: you apply, and you must qualify — a permit is not issued automatically with your business license. Purchases for your own use, like equipment or supplies you keep, are still taxable.

Selling to Customers in Other States and Economic Nexus

Selling to customers outside Washington can create a tax responsibility in that state, called economic nexus. Once your sales into a state pass its threshold — Washington, for example, uses more than $100,000 in combined gross receipts from Washington customers for remote sellers — you may be required to register with that state and collect its sales tax on future sales. Every state sets its own thresholds and rules, so check with the tax agency of any state where you have meaningful sales.