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Registration & UBI Number

Generally, every person conducting a business activity in Washington must register with the state of Washington through the Business License program.  Once registered, you receive a nine-digit UBI number.  Usually, this number is also your Department of Revenue Tax Registration Number.  You also receive the state Business License.   You are considered a business when you engage in any activity, including hobbies, for gain, benefit, or advantage (regardless of profit or loss.)

Generally, you must register with the Department of Revenue if any of the following apply:

  • Your business is required to collect retail sales tax,
  • Your gross income is $12,000 per year or more, or
  • Your business is required to pay any other taxes or fees to the Department of Revenue.

(Note:  Farmers that make only wholesale sales of products they grow are not required to register for a UBI number. See Farming Activities)

Washington’s Major Taxes

Persons engaged in wine industry activities are potentially subject to the following taxes: 

  • Business and Occupation Tax
  • Retail Sales Tax
  • Use Tax
  • Litter Tax
  • Personal Property Tax

Business and occupation tax

The business and occupation (B&O) tax is a gross receipts tax on the value of products, gross proceeds of sale, or gross income of a business. There are no deductions for labor, materials, taxes, travel expenses, or other costs of doing business. 

The B&O tax rates vary depending on the business activity you conduct. There are over 30 B&O tax classifications. Some farmers and most wine makers and sellers are subject to B&O tax.  Farmers generally report under the retailing classification (the law exempts from B&O tax all wholesale sales by farmers of agricultural products they grow.)  Depending on their activities, others in the wine industry may report under one or more of the following classifications: 

  • service and other activities
  • manufacturing
  • processing for hire
  • wholesaling
  • retailing  

Small Business B&O Tax Credit (Credit ID 815)

If your business’ B&O tax liability is below a certain level you are entitled to a credit. The credit varies depending on the amount of B&O tax due (the total of all classifications) after all other B&O tax credits have been taken.  The Small Business Tax Credit is available for businesses whose total B&O tax liability is less than:

$71 for monthly taxpayers
$211 for quarterly taxpayers
$841 for annual taxpayers

The credit must be reported under the “Credits” section of the tax return when claimed.  (See WAC 458-20-104 for additional information.) 

Washington’s Major Taxes

Retail sales tax

If your business sells or rents goods at retail or performs retail services, you are responsible to collect sales tax from the consumer on the total charge for each sale, unless a specific exemption applies, and remit the retail sales tax to the Department. The amount subject to sales tax includes shipping and delivery charges, permits and other fees, labor, profit, materials, and charges for any subcontractors, even if they are billed separately.  Retail sales tax is comprised of both a state rate (6.5%) and a local rate (.5% to 2.5%).  Local rates vary depending on the location where delivery is made or where retail services are performed.

Remember:  Sales invoices must be given to customers for all purchases and the sales tax must be separately stated on the invoices. You are liable for paying sales tax to the Department of Revenue even if you do not collect it from your customers. (RCW 82.08.050)

Washington’s Major Taxes

Use tax 

Use tax is a tax on the use of goods or retail service in Washington when sales tax has not been paid.  Goods and retail services used in Washington are subject to either sales tax or use tax, but not both.   Use tax is based on the value of the item or service and includes charges for labor, materials, freight, handling, and any other amount paid or accrued, even when separately stated.

Examples of when use tax is due:

  • Mail order, telephone, Internet purchases or magazine subscriptions from businesses with no presence in Washington.
  • Goods purchased with a reseller permit but then used or consumed by the business.
  • Tangible personal property acquired with a purchase of real property.
  • Goods purchased in a state with no sales tax or a tax rate lower than Washington’s.
  • Amounts charged for service and repairs performed outside of Washington.

 

Remember: You should always pay use tax when an out-of-state vendor does not collect retail sales tax on items that are subject to sales tax.  

Tip: An online Use Tax Return is available on our web site at http://www.dor.wa.gov.

Washington’s Major Taxes

Litter Tax

Litter tax applies to manufacturers, wholesalers, and retailers of certain products, which specifically include food for human consumption (e.g., fruit) and wine.  For manufacturers, the measure of the tax is the value of qualifying products manufactured in Washington.  For wholesalers and retailers, the measure of the tax is the gross proceeds of sales of qualifying products in Washington.

Note:  The law exempts wholesale sales by farmers of agricultural products (RCW 82.04.330) and sales of beverages (such as wine) for immediate consumption on the seller’s premises from litter tax (RCW 82.19.050)

Washington’s Major Taxes

Personal Property Tax

Most people are aware that property tax applies to real property. Personal property used in a business, such as equipment, furniture, and supplies, is also subject to personal property tax.  The tax rate is the same as for real property.

Every person who uses personal property in a business or has taxable personal property must complete a Personal Property Tax Listing Form by April 30 each year. The assessor uses the form to value personal property for taxes due the following year.

County assessors and treasurers levy and collect the property tax. The county assessor mails personal property listing forms in January to persons who have previously listed personal property. For questions regarding personal property tax, contact your local county assessor’s office.