When is Licensing required?
Whether licensing or registration is required by or with a particular state or local authority, such as the Washington Department of Licensing or the Washington Department of Revenue, will depend on a number of factors.
One factor is whether the type of business in which the company proposes to engage is one for which a specific license is required. A partial list of types of businesses requiring a business-specific license at the time this Chapter was written appears in Appendix A to this Chapter.
Another factor is whether the company is actually “doing business” in Washington at all. If a company has no offices and no employees or agents physically present either temporarily or permanently in Washington, and only sells products or services into Washington, Washington law generally does not require the company to satisfy Washington licensing or registration requirements. Conversely, a company with a permanent office and employees within Washington will certainly be required to apply for all pertinent licenses and registrations.
Registration with the Department of Revenue obviously has great significance, as it will result in the imposition, at the very least, of tax reporting requirements, and will moreover subject the company to scrutiny regarding the company’s liability for business and occupation tax, sales and use tax and other Washington taxes.
The Washington Department of Revenue’s “economic nexus” rules, adopted in 2010, are a very important exception to the general rule physical presence stated above, and should be carefully noted. Under the economic nexus rules certain types of business activities (so-called “apportionable activities”) may trigger Washington business and occupations tax (and therefore the obligation to register with the Washington Department of Revenue), even if a company has no physical presence in the state. If a company has no physical presence in Washington, but has more than $50,000 of property located in the state, more than $50,000 of payroll in the state, more than $250,000 of receipts from the state or at least 25% of the company’s total property, total payroll or total receipts is in or comes from Washington state, then the company may be required to register with the Department of Revenue and is responsible for business and occupations tax.
Registration with the Employment Security Department and with the Department of Labor and Industries is required for most companies with employees doing business in Washington. Note that in some circumstances persons treated by a company as independent contractors may as a matter of Washington law be employees, triggering registration requirements and employment tax obligations.
In most cases, conducting business without first obtaining the license required for the conduct of that type of business is a misdemeanor. An important consequence of failing to register with the Department of Revenue is that the company will not have available to it a statute of limitations defense on any Washington tax liability which may later be imposed. Also, a company that has not registered will most likely also not be reporting and paying Washington taxes; interest and penalties are imposed on taxes which are due but unpaid.
One factor is whether the type of business in which the company proposes to engage is one for which a specific license is required. A partial list of types of businesses requiring a business-specific license at the time this Chapter was written appears in Appendix A to this Chapter.
Another factor is whether the company is actually “doing business” in Washington at all. If a company has no offices and no employees or agents physically present either temporarily or permanently in Washington, and only sells products or services into Washington, Washington law generally does not require the company to satisfy Washington licensing or registration requirements. Conversely, a company with a permanent office and employees within Washington will certainly be required to apply for all pertinent licenses and registrations.
Registration with the Department of Revenue obviously has great significance, as it will result in the imposition, at the very least, of tax reporting requirements, and will moreover subject the company to scrutiny regarding the company’s liability for business and occupation tax, sales and use tax and other Washington taxes.
The Washington Department of Revenue’s “economic nexus” rules, adopted in 2010, are a very important exception to the general rule physical presence stated above, and should be carefully noted. Under the economic nexus rules certain types of business activities (so-called “apportionable activities”) may trigger Washington business and occupations tax (and therefore the obligation to register with the Washington Department of Revenue), even if a company has no physical presence in the state. If a company has no physical presence in Washington, but has more than $50,000 of property located in the state, more than $50,000 of payroll in the state, more than $250,000 of receipts from the state or at least 25% of the company’s total property, total payroll or total receipts is in or comes from Washington state, then the company may be required to register with the Department of Revenue and is responsible for business and occupations tax.
Registration with the Employment Security Department and with the Department of Labor and Industries is required for most companies with employees doing business in Washington. Note that in some circumstances persons treated by a company as independent contractors may as a matter of Washington law be employees, triggering registration requirements and employment tax obligations.
In most cases, conducting business without first obtaining the license required for the conduct of that type of business is a misdemeanor. An important consequence of failing to register with the Department of Revenue is that the company will not have available to it a statute of limitations defense on any Washington tax liability which may later be imposed. Also, a company that has not registered will most likely also not be reporting and paying Washington taxes; interest and penalties are imposed on taxes which are due but unpaid.