WA State Taxes 101 ~ Info and FAQs

Licenses and taxes are like bookends. Whenever you get a business license, wheels are set in motion ... which result in having a duty to make reports and possibly send in taxes.  

The Basics

Who you're working with: Washington State Department of Revenue, or DOR for short
How Often: Either......annually, quarterly, or monthly
Types of Tax: Sales Tax, Use Tax, Business and Occupation Tax (B&O)
Websitedor.wa.gov

Who has to pay~
B&O Tax: Everybody, but small businesses get a credit
Sales Tax: Some of you, if your work is categorized as Retail
Use Tax: Some of you, if you purchase business tools/supplies from out of state

What you're being taxed on~
B&O Tax: Gross Sales
Sales Tax: Percentage of Retail Sales
Use Tax: Percentage of items purchased out of state

The Process:
You log onto the DOR website, go to a portal, make a "report" by filling in some numbers. This report will show you if you owe taxes, and how much. If you are doing Service work only, it's fairly simple. If you do Retail work, it's a little more complicated.

To Get Help:
Call the DOR! Their job is to help you understand + to make reports. So far, in my experience, they've been knowledgeable and friendly. 1.800.647.7706


The Story ~ how it works in Washington state, in a nutshell.

You decide to start a business—Woohoo! At some point, you find your way to the Business Licensing Service (BLS) and get a state license—too legit! Now ... since you're a business, the state says: you gotta pay some taxes for the privilege of doing business. Also, if you're doing any retail work (making products, or improving physical things), then we need you to collect Sales Tax. So ... they send your info over the Department of Revenue, the DOR.

The DOR creates an account for you, and decides how often they want you to pay taxes + submit any sales tax you've collected. They create a letter and mail it to you. It's got some important info. It's one to read and keep! It will tell you how often to make reports and submit taxes: annually, quarterly, monthly. Also, it has a code that you'll need—the PAC Code which is required for setting up online payments.


Here are some FAQs + Answers

How often do I have to make reports and send in payments?

Either annually, quarterly, or monthly. The letter will tell you how often you need to report and send in taxes. If you lost the letter, or you're not sure, you can find out by calling the WA state DOR: 1-800-647-7706. It's common for small businesses to be annually or quarterly.

What's the Due Date for Annual reporting?

January 31

What are the Due Dates ... if I report Quarterly to the state?

January 31
April 30
July 31
October 31

I got a paper form in the mail. Do I have to use it?

My recommendation is to file online, and NOT use the paper form. Why? The paper form is very confusing, and it's easy to make mistakes. Once you file online, they will stop sending you the paper form. To set up your online account, you'll likely need a PAC code. This is listed at the top of the paper form, so find that code before you recycle that crazy thing!

I was assigned Quarterly payments. Ugh. Why is that? Can I change it?

Basically, the state wants to collect tax money on a regular basis. If you have a Retail business (meaning you'll be collecting sales tax) and/or if it looks like your income will be high, they will assign you to making reports quarterly. 

♥ Please don't worry too much though! Once you know how to make reports to the state, it only takes a few minutes!

If you want to change it to reporting annually, in the past, the only way was to call the state in January. If your income is low enough, they'll make the change. That number is: 1-800-647-7706. It's possible that there are new rules, so you might try calling soon if you want to check.

You talk about Making Reports, Paying Taxes, Submitting Taxes, are these all the same thing?

Great question. They're slightly different. I like to think about things at the most basic level first. Once you have a business, you are required to Make Reports to the state. Sometimes, if you're very small, and/or do service work, then you won't owe any money. Yay! BUT, you still have to make the reports so the state knows this. This is step one of the process.

Paying taxes are when your business is actually being taxed. That's the B&O tax, and Use Tax. This is based off a percentage of your Gross Sales, and any purchases out of state. The money comes out of your pocket.

Submitting taxes is different. This is Sales Tax that you've collected from your buyers. It is tax based on their purchase. It comes from their pocket. You're simply the carrier of that money.

I heard that I have to send in Estimated Quarterly Tax Payments? Is this the same or different?

This is a super common question. This different. When you have a business, you must report to all levels of government: city, county, state, and the IRS. It's easy and reasonable to get them mixed up!

"Estimated quarterly tax payments" are part of paying your federal taxes to the IRS. These are estimated based off the profit your business is likely to make. They are due four times a year: Jan 15, Apr 15, Jun 15, Sep 15. Click here to read more.

If the state says that you must report quarterly, that is for state taxes, which include: B&O, sales tax, use tax. These are calculated from your actual sales. 

How can I get more info + help with this?

Lots of ways! 

♥ Coming soon: Walkthrough Blog Post, with screenshots. (The DOR has a new portal that I've still gotta learn.) To see screenshots of the OLD system, click here for Service Providers.  Or here, for Retailers. This will at least give you the general idea.

♥ Tax Help Pop-up Shop. Or any other Pop-up Shop. Get 1-on-1 help with Yours Truly for an affordable rate. Click here to see the current series, or email me at: jennygirlfriday@gmail.com.

♥ Get help from the state DOR. They offer workshops, online tutorials, and even consulting! Click here to see more info at DOR.wa.gov. 

♥ If you currently work with an accountant or bookkeeper, check with them.


Have any more questions? 

Please email me at jennygirlfriday@gmail.com. I would love to get an answer to you, and to add more to this post!

♥ Jenny Girl Friday

 

P.S.  Did this help?  I hope so!  Pretty please share with any friends, or post on Facebook.  I think self-employed folks are keeping the soul in Seattle.  I want to make the chores of business easier, so you can all keep being awesome and shining your light.  

P.S. 2   Are you signed up for Sidekick Services via email?  Get reminders and links to how-tos delivered right to your email inbox.  :)

How to CALCULATE numbers for IRS taxes: pen and paper, spreadsheets, software

Evolving blog post - photos coming soon!

This is step three of the Prep for IRS Tax process.  To see all the steps, click here.

In a nutshell

You need to report some numbers related to your business AND have some evidence to back them up (receipts, bank statements, etc.). How you add up the numbers is up to you! 

The numbers (eventually) get reported on the Schedule C.  If you use software or a tax preparer, they will ask you questions, then put those numbers onto the Schedule C for you.

Consider using the handy worksheets below to keep track of your numbers.


Alert: This blog post may look really complicated, and I apologize for that! It's tough because every situation is different, and I'm attempting to speak to a variety of situations in one post. ♥ Please know: once you get into the material, it usually starts to make sense. Also, I invite you to email me with any questions! jennygirlfriday@gmail.com

ProTip: Print the Calculate-Basic worksheet, and just start filling in what you know. Then come back to the post for more ideas when needed. 

ProTip: Get a friend to help you with this. They can read the instructions, then together, you can figure out how to proceed.

The Calculate-Basic includes everything you need for MOST situations.  The Calculate-Next Level is helpful if you're planning to file using paper forms, or if you want to predict your self-employment tax amount.



Gross Sales

AKA Gross Income / Total Deposits

Important: This number NEVER includes any sales tax collected. 

You need to have a total Gross Sales number, and a record to back this up. Perhaps you already have this total, or parts of it.......or perhaps you have to create it still.  Here are some options.


Different Ways to Keep / Create a Gross Sales Record

If you already have this record, great!  If you need to make one up for last year, read on! The basic process is:

1   Find the payment amounts
2   Make a Record
3   Find the Total
4   Format for the IRS

 

1 - Find the payment amounts

Here are all the places to look: 

- Bank Statements - look at deposit records
- Deposit Slips
- Copies of Receipts/Invoices
- Reports from Commerce sites
- Calendar - find all appointments and mark what you got paid for each

2 - Make a Record

Ideally, include the date, purchaser name, and amount of each.

These are options for you to choose from:

- Keep a list of all payments in a notebook
- Record payments in a spreadsheet
- Print out all summary reports from websites you use, keep as your records
- Use software or an app (such as Quickbooks or Fresh Books)

3 - Find the Total

Add up all your numbers to find your Total Payments by customers. This is your Gross Sales.
Do NOT include any sales tax collected.

- Use calculator
- Put into a spreadsheet, and use formulas to add
- If using software, go to the Reports section to get the totals

4 - Format for the IRS

Did you get any 1099-MISCs or 1099-Ks for your business? These are simply proofs of payments that someone else made to your business. The numbers on these forms should already be included in your Gross Sales amount.

> If you're filing with Paper Forms, then you just report your Gross Sales, which includes the totals on these forms. You do NOT need to list out their amounts separately. 

> If you're filing with software or an accountant, they will ask you for your Gross Sales in parts. So you'll need to find the subtotals for:

___1099-MISCs
___1099-Ks
___ All other payments (including barter)
___ Total of Gross Sales


Expenses

Okay, options! Here are three of my favorite. There are more options and variations. Hopefully this will give you an overall idea, and you can create something that works for you. 

Note: For evidence of our business expenses, receipts from the purchase are best. The IRS will also accept bank and credit card statements.

Pen and Paper

With Receipts

1. Look at the categories of business expenses (on the Calculate-Basic sheet or the Schedule C)
2. Make piles with your receipts in each category.
3. Add up the totals for each, and fill in the chart. Perhaps write these amounts on pieces of paper to keep track, one for each category.
4. Suggested: staple each stack of receipts together.

With Bank Statements

1. Look at the categories of business expenses (on the Calculate-Basic sheet or the Schedule C)
2. Get a piece of paper for each category, label at the top.
3. Go through Bank Statements. Find each business expense. Highlight, circle, or underline it on the statement.
4. Decide which category the expense falls in. Write each expense on the corresponding piece of paper. (For example, if you see a line for "Office Max", write the amount on the paper that labeled "Office Expense".)
5. When all expenses have been recorded, add up to get the totals. Record on the Calculate-Basic worksheet by category.

Spreadsheet

1. Look at the categories of business expenses (on the Calculate-Basic sheet or the Schedule C)
2. Label a column or separate tab with each category. (Depending on how you like to work.)
3. Go through your receipts and Bank Statements. Find each business expense. Highlight, circle, or underline on the statement.
4. Decide which category the expense falls in. Add it to the column or the tab.
5. When all have been recorded, add up to get the totals. Record on the Calculate-Basic worksheet.

Quickbooks or Other Software

1. Finish inputing/uploading all expenses for 2017
2. Find the Reports page
3. Select Profit and Loss statement
4. For the time period, select Last Year
5. Look at the report. Review each category.
6. Make any adjustments.
7. Print the Profit and Loss statement. Or, record the amounts on the Calculate-Basic sheet.


Special Expenses

These get calculated in special ways, so deserve their own section.

Special Expense - Mileage

There are two ways to deduct driving expenses. For each vehicle, choose one method and stick to it each year.

Option A:  Actual expense. (Less common)

With this option, you collect and report ALL costs associated with your vehicle: gas, insurance, repairs, maintenance, and tab renewals. If you use it part for personal and part for business, you need to calculate what percentage is used for business. Then take that percentage of the total costs. 

So, if you use for business 30% of the time, you'd deduct 30% of all costs associated with that vehicle.

Add this expense to the Car and Truck Category.

Option B: Mileage Deduction (most common)

For every mile that you drive for business, you get to deduct a specified amount. In 2017 it was 53.5 cents per mile. With this method, you need to know your total business miles. Additionally, you're required to have a record. The easiest way is to use an app, such as MileIQ. Or, you can keep a log book.

For most forms of filing, you'll be asked for:

___ Starting Odometer reading, on January 1
___ Ending Odometer reading, on December 31
___ Grand Total of All Miles
___ Total of Personal Miles
___ Total of all Commuting Miles (driving to and from an office)
___ Total of all Business Miles

To Claim the Expense:

If using Paper Forms
A. Calculate Total Business Miles x 0.535 =____________.
B. Add this to your Car and Truck Total

If using Software or Working with a Tax Pro
A. Have all of your Mileage Totals Handy
B. Do NOT include in Car and Truck expense
C. Provide information when asked, and they will calculate and deduct

Special Expense - Home Office

If you have a home office that meets certain requirements, then you can make a deduction. There's a Regular Method (that's complicated) to do this, and a Simplified Method.  I will only speak to the Simplified Method. To learn more, go to IRS.gov, or ask your accountant.

A. Decide if you meet the requirements: the space is ONLY used for business, and it is your principle work space.
B. Measure the Square Footage.
C. Multiply Square Footage by $5=_____________
D. If using Paper Forms, claim this expense on the Schedule C on Line 30. (It is in a separate place than other expenses.) Also, consider researching or asking someone about Schedule A. I have yet to learn about this.
E. If using software or working with a tax pro, input when prompted.

 


♥ If this is your first year..........hang in there........and just try your best! If you find out in the future that you did something wrong, or forgot some major deductions, don't worry, you can amend tax returns from previous years.

Actually, that goes for everybody. Just try your best. Take things one step at a time. Do what you can. Reach out for help: from a friend or colleague, email me, meet with a tax volunteer at the library, or your bookkeeper or accountant.

To read about options for Filing, click here.

For the next Tax Help Pop-up Shop, click here.

: )  Jenny Girl Friday

P.S. Know any other self-employed Seattleites who could use this information? Please forward freely!
P.S.2 Are you already signed up for Sidekick Services? If not, click here and join the list to receive tax + license reminders, how-tos, inspiration and more delivered to your inbox.

How-To Prep for IRS Taxes (Includes fun + rewards!)


gFVintageScaleJennyGirlFridaySeattle.jpg

Prepping for taxes is a lot like planning a big party or fancy dinner. (Okay, maybe a little bit different.)

It's possible to do it all at once.........or to break it up over time.  There are pros and cons to each!

Doing it all at once

....is more efficient, you get really in the zone, and sometimes adrenaline fuels quicker working. 

Breaking up over time

....means the effort is less intense, you have time to catch important details, you can rest in between. 

Either way, it's helpful to know early how you're going to file, so that you can line up any help, or make appointments. (For example, if you're planning to go to H&R Block, you'll need to find their open hours. If you're hoping to work with an accountant, they'll have their own deadlines for you, earlier than April 17th!) Click here to read more about options for filing.

Overview

I've broken up the process into several steps, which can be spread over days/weeks, or done all at once. More details about each step below. Please keep in mind: as a project manager client once explained to me.......when you break things into many steps, each step looks easier, but then, you have a lot of steps! Don't let this discourage you. Just find a way to start, and, in theory, each step should feel easy and quick, and you'll build momentum.

0. Review REWARDS Menu (optional + recommended)
1. WARM UP 
2. COLLECT stuff (coming next)
3. CALCULATE some numbers - Basic + Next Level
4. CHECK + find any missing pieces
5. FILE / SUBMIT along with your IRS taxes - File-paperFile-onlineFile-tax pro
6. STORE tax forms and back up document
7. Optional: Reward + Reflect

It can look like a lot! And feel like a pain! It can also be very rewarding, and I'm determined to help you build in some fun. 


Warming Up

Warming up ... okay, so you don't have to, but it will make things more pleasant. 

It's like stretching before playing soccer, or better yet, like a cocktail + appetizer before dinner!

As part of our Tax Prep, Warming Up includes picking a due date, your option for filing, considering your way of working, putting time on the calendar, and most importantly...........finding ways to make it fun and picking rewards

Click on the image to get a downloadable PDF.

You might notice that I often refer to inviting a friend to join you for some of this work.  I'm not kidding about this! If you make an appointment with a friend, you're more likely to do the work (not put it off), it's way more more fun, it can go faster, and they can help you figure out anything confusing. Most often, friends are happy to lend a hand in exchange for dinner, a bottle of wine, a candle, or just some sincere thanks.

Do you have someone who could keep you company with this?


Collect Stuff

AKA.....Treasure Hunt Time!!!!!!

I love this step.  Can you tell? Here's why. Every receipt you find for business expenses is like finding $$$$$!  Depending on your specific tax scenario...for each receipt, you'll be saving 20 - 30% of what that receipt is worth.

For example, if you bought a few books for your business, and the cost totaled  $80...then you'll pay $16 - $24 less in taxes. 

With this step, we're just collecting stuff. No adding, no smoothing receipts, just find it.  

ProTip: create a spot somewhere to put all these things, or perhaps a very pretty basket, or decorated office box.

Heads up: it's very helpful to print a lot of records, so you may have to stock up on some ink. (I like to use remanufactured ink to save money.)

Click on the image to get a downloadable PDF.


Calculate

So.........you don't pay too much!

 

>>>  If you know what to do, or would like to just figure it out as you go, print the Calculate-Basic sheet and start filling in numbers.

 

Why we're doing this

Before we talk about the numbers we need, let's review why we have to do all this work. Basically, it's so that you don't pay too many taxes! The IRS taxes you on your Income. When you are a sole proprietor or single-member LLC, the profit from your business is considered your income.

If you were to only report your total payments (gross sales), you'd have to pay taxes on that entire amount...even though you likely had to spend money on running the business. That wouldn't be fair. Thank goodness, we don't have to do that! Instead, we report our profit, and we're taxed on that.  In order to report our profit....we required to report several numbers, as a sort of proof. Here's more on that....

The Basic Numbers + Formula

To find our profit, we report the following numbers + formula:

Gross Sales
- Expenses
= Profit

Two of those numbers (gross sales and expenses) are made up from several other numbers, and have to be reported in the right way. The IRS created the form Schedule C for sole proprietors and single-member LLCs. The worksheets I created are simplified versions of the Schedule C.

Gross Sales, may include:

- totals from 1099-MISC, given to you
- totals from 1099-K, given to you
- totals from all other payments, including barter

Expenses, may nclude:

- totals by category of business expenses
- total business miles
- square footage of home office

The Calculate Step

In this step, the idea is to find these numbers. It's possible you have them already if you've been keeping records, or using a program such as QuickBooks. 

[Even if you have these totals, it's great that you've collected your receipts and bank statements, because these are part of the evidence that you need to keep for several years—7, I think?—in case you get audited.  (Btw, good news, less than 1% of people get audited.)]

If you still need to calculate your totals, and would like some guidance, click here to read more about this. There are several ways to do this!  Just a few include: pen and paper, spreadsheets, and software. Find what works best for you, and consider getting a friend to help.


Check

Congrats! You've finished the CALCULATE step, often the longest one. By any chance, did you discover that you were missing some things? Or did you have new questions as a result of your work?

That's super normal! That's what the Check + Find is about: finding missing things, getting answers, and double-checking your math. This step is optional. It's offered for those of you who like to be very thorough before filing.

This checklist prompts you to check the math you've done so far (income subtotals, expense totals, mileage).
+
There's space to list questions and things to find.  Use it to keep track of your progress.


File!

It's finally here, the big moment.

Well, actually, with all your amazing prep work, this part is likely to go rather quickly.  :)

There are slightly different actions to take, depending on which way you're filing. The worksheets to the left work for:

Filing with Paper Forms

Filing Online - TurboTax, H&R Block, TaxAct, etc.

Working with a Tax Pro - Accountant, CPA, preparer, volunteer

Each checklist covers the basics that are related to Self-Employment—Schedule C, SE, and a few lines on the 1040. The checklists do NOT include steps to complete the entire 1040 form.

It's possible that you might have a few additional details to add, or issues to explore. Hopefully, getting the basics all done will make it easier to figure out the rest.  

(Please note: Technically, these are not guides, they are reminders in a logical order. This blog is for tax education, and doesn't constitute tax advice.)

♥ They might look long, but don't worry too much! They only look long because I wrote out each little step separately. 

♥ Remember to get a friend to keep you company, and/or make the job fun with things like favorite music, treats, a fun show in the background.

♥ Also, when you're finished with this step, be sure to give yourself the reward you identified! It's common to be too tired and relived to care, and to skip the reward. Please don't!  You deserve it.   


Store

Phew! You're almost done. There's just one last crucial step - to Store everything away. You might be thinking, I'm over this!  I'm done! I get it, that's super reasonable....and I promise, this last step is worth it and feels really, really good.

It's your choice: you can shove papers in an envelope or file willy nilly.  Or, put things in place...neatly, and methodically. Either way, you'll feel so much satisfaction, relief, and closure.

And, if ever in the future, you do need these documents, you'll be SO glad that you did this.

As usual, I invite you to add a reward for this step, even though it's not on the checklist!


Optional: Reward + Reflect

Well done! You just finished a big job. It's essential that you reward yourself. (This is part of staying in the game of self-employment.)

Hopefully, you already did this. If not, now's your second chance.

Also, right now, fresh off the job, is the BEST time to make a change or two, to make life easier next tax season, and throughout the year. Do your future self a big favor by taking just 5 - 10 minutes to reflect!

Bravo! We're really done now. :)


You got this!

 


Jenny Girl Friday

P.S. Know any other self-employed Seattleites who could use this information? Please forward freely!
P.S.2 Are you already signed up for Sidekick Services? If not, click here and join the list to receive tax + license reminders, how-tos, inspiration and more delivered to your inbox.

IRS Taxes - Different Options for Filing, from Paper to CPAs and in between

Please note: this is an evolving blog post.

I'm hoping to do continued research on this topic! (Perhaps with your help.) What you see below is what I know currently,  I'll continue to revise and refine this post over time. If you have any information, feedback, input, or questions, please get in touch!  Email me at:  jennygirlfriday@gmail.com.

There are several great options for filing your IRS Taxes.  This year, they are due on Tuesday, April 17th.

When you're self-employed, there are just two additional forms that get added to your normal taxes.  The Schedule C and the Schedule SE. They're not too complicated. (Schedule SE looks a bit crazy, but really, there's only a few lines that you need to do!)

If you're filing with software, online, or with an accountant, usually, they will ask you a lot of questions, and then put your info into the forms. (Coming soon....Click here to read more about the forms, and what information you'll need for each.)

Filing Options

Here's a list, from the most basic to the most formal. More details about each below.

♥ Paper Tax Forms
♥ Free Online Portals
♥ Online Portals / Software (For Purchase)
♥ Tax Preparers / Bookkeepers
♥ Accountants / CPAs


♥Paper Tax Forms

Prefer the Old Skool Way? Paper tax forms still work just great. Fill out your 1040 as you normally do, then add the Schedule C and Schedule SE. You can download these directly from the IRS.gov site, or find at many libraries. 

Variations

• Do on your own, using the instructions
• Get a friend for moral support and a 2nd set of eyes
• Use the Walkthroughs on the Business Apothecary, by Yours Truly (coming soon)
• Get free assistance at a Library, sponsored by the AARP
• Sign up for a Tax Pop-up Shop

Pros: You can see all your numbers. It's easy to double-check the information. It feels very satisfying and transparent.
Caution: Paper forms don't prompt you...so you might miss out on certain deductions, or credits.  Such as the state sales tax deduction. (I have to look into that one still!)


♥Free Online Portals

I believe there are a handful of free portals to use. Usually, these work for basic tax situations only. Some can handle self-employment taxes. 

One option is the IRS Free File.
Another is H&R Block, at hrblock.com
(Know any more good ones?  Please send my way!)

Variations

• Do on your own, using the instructions
• Get a friend for moral support, and a 2nd set of eyes
• Use the Walkthroughs on the Business Apothecary, by Yours Truly (coming soon) to help you prepare your numbers ahead of time.
• Sign up for a Tax Pop-up Shop to get assistance with the self-employment section

Pros: It's free! It'll know about current tax credits, deductions, etc. It will prompt you for all the information.
Caution: It can be hard to get support when you run into trouble. The graphics aren't as easy or pleasing to the eye. Sometimes, there are limits...such as you have to earn under a certain amount.


♥(For Purchase) Online Portals / Software ... like TurboTax

Have you already been doing your taxes online with TurboTax or something similar?  Then adding your self-employment taxes is pretty easy! The portal will guide you through a series of questions about your business, then it will do some of the math for you, and put all of your information into the proper tax forms (that get submitted electronically).

The golden standard is: TurboTax. A major benefit is....they are the same company that created QuickBooks. So, if you've been using those, it can be really quick to upload all your data right into TurboTax!

(Know any more good ones?  Please send my way!)

Variations

• Do on your own, using the instructions
• Get a friend for moral support, and a 2nd set of eyes
• Use the Walkthroughs on the Business Apothecary, by Yours Truly (coming soon) to help you prepare your numbers ahead of time
• Sign up for a Tax Pop-up Shop to get assistance with the self-employment section

Pros: It'll know about current tax credits, deductions, etc. It will prompt you for all the information. It's easy to use. Excellent help available.
Caution: Sometimes one can get lost in the process. The portals guide you through, but it's sometimes hard to go back to change things. There are often a lot of up-sells, and it's hard to know when you really need them or not.


♥Tax Preparer / Bookkeeper

Do you feel better working with someone? Is your situation fairly straightforward? Working with a tax preparer or bookkeeper can be a great option! These are folks who are trained in, and very experienced with, doing basic taxes. They are different than CPAs (Certified Public Accountants), and usually cost less. Want to know more about the difference?  Click here to read more on clearskybookkeeping.com.

Options:

H&R Block offers in-office assistance with using their portal, for a fee

(Know any more good ones?  Please send my way!)

Variations

• Go into an office
• Hire a consultant to come to your office
• Sign up for a Tax Pop-up Shop for preparation of very basic taxes, including self-employment

Pros: Working with a real person to lead you through the process. Get answers to questions. Preparers will prompt you for all the information. They know all the things to check for at the end. Gives you a natural deadline for your preparation part.
Caution: Different personalities (sometimes folks are not friendly), tax preparers/bookkeepers may or may not know some of the very detailed laws that apply to your situation. 


♥Accountants / CPAs (Certified Public Accountant)

This is the Cadillac approach! Accountants have a degree in their field, extensive training and experience with taxes, as well as a broader view of money in our lives, financial reports, investments, retirement, etc. They're who you need if you want to do any number modeling, get advice with decisions, do long-term planning, and more. 

Some accountants are also CPAs. CPAs have to answer some additional and very high standards! They must have a professional license, follow a code of conduct, and get continuing education. CPAs are a great choice if you: have a complex situation (own properties, stocks, divorce, etc.), if it feels reassuring for you to the highest level of training for doing taxes, plan to grow into an S-Corp or change to a non-profit.  

They will usually provide you with a questionnaire each year during tax season and a due date.

Options:

Many CPAs are moving to a subscription model, where you pay a monthly fee each month...and you get your annual taxes prepared + support year round. Some provide a quarterly check-in/tune-up plus annual filing. Personally, I think this is a great move!

Two CPAs with subscription models (that I've just learned about!) are:
• Timber Tax, with Luke Frye and Anne Chan at timbertax.co
• Hipster Money, with Alexandra Perwin at hipstermoney.com. (Website is still being developed.)
• Penny Smart Girl, with Meka West at pennysmartgirl.com

Some Accountants/CPAs are willing to do your once-a-year annual filing, and charge one fee for that job.

• Ballard Bean Counters, with Rose Westwood at ballardbeancounters.com

(Know any more good ones?  Please send my way!)

Variations

• Go into an office
• Work over the phone and online
• Hire a CPA who also handles your bookkeeping

Pros: Working with a real person to lead you through the process. Get answers to questions. They can give advice. They can often save you money by knowing all of the credits and special rules! Gives you a natural deadline for your preparation part. You can reach out for help via email or the phone.
Caution: Different personalities (sometimes folks are not friendly). It still takes work on your part to prepare for the Accountant. Sometimes the portals that accountants use can be confusing.


Heads Up ~

However you choose to file your taxes—and with whom—it'll still be up to you to have the numbers and evidence for them. That's where I've got you covered! (Coming soon - Click here for a workbook.)

A couple parting thoughts ~

*****You have the right to be treated well by whoever is helping you with filing your taxes!***** If you ever come across someone who's being severe, unfriendly, or acting like you should know this stuff........then I invite you to move on! Find someone else. You're hiring them to help you! Your job isn't to know this stuff! Your job is to do your work, then find the paperwork + numbers that they ask you to get.

+

It actually is rewarding to do taxes. :)  It sounds complicated. It interrupts your schedule. It can be confusing. Also, it is evidence of all the beautiful work that you did last year! Think about all the clients and buyers who benefited from your work! Look at all you accomplished! Every number represents income or expenses that you purchased to do your work. That's pretty cool.

Here's to a rewarding tax prep time!


Jenny Girl Friday

P.S. Know any other self-employed Seattleites who could use this information? Please forward freely!
P.S.2 Are you already signed up for Sidekick Services? If not, click here and join the list to receive tax + license reminders, how-tos, inspiration and more delivered to your inbox.

Retail + Combo Businesses ~ How To Make Your Annual Report To The WA DOR (For Excise Taxes)

Does your work include: retail, retail-service, wholesale, manufacturing, or royalties. Or a combination?

Then this post is for you!

If your business is NON-retail SERVICE only, click here to see a different walkthrough.

A little warning.  Reporting to the state isn't that bad........though, this blog post will perhaps make it look a little confusing.  Additionally, the online tax forms will definitely make it look even more confusing!!!  That is because there are SO many variables, and one form has to serve all industries.

The best thing to do is collect your numbers, then get help.  You can call the state.  It's their job to walk you through this.  Or, get in touch for a one-time consult with me.  Or, get a good friend to read through the instructions with you together.  :)

Due: January 31st
Time Required: 20 - 60 minutes to file, perhaps up to 2 hours
Frustration Factor: 5 out of 10
Cost/B&O Taxes Due:  If you earned under about $45K (gross sales), then you will not pay any B&O taxes to the state.  If your gross sales were over $45K, then it could be a few hundred dollars up to a thousand or more.
Sales Tax Due:  Depends on your retail sales total(s) and locations
Type of Tax:  B&O (business and occupation), Sales Tax, Use Tax (not covered in this post)
With: WA State Department of Revenue (DOR), using DOR.WA.gov  
Options:  Paper on Online.  Recommended ~ use the ONLINE form! 

More information and screenshots below.  If you need help at any time, call the state at:  800.647.7706


Summary of the Task

1. Log in
2. Find the correct boxes for each business category: Retail, Service, Wholesale, Manufacturing, Royalties, etc.
3.  Fill in total amounts by category
4.  Enter all the cities you sold retail products or services
5.  Enter retail sales by time period, from 1/1/17 - 3/31/17, then from 4/1/17 - 12/31/17
6. Click next through several screens
7.  Confirm
8.  Go through payment screens to submit sales tax + any B&O tax owed

**In some cases, enter "Tax Paid at the Source" as a deduction.  (Explained on Prep Sheet, below.)

If you're ready, click here to get started at the DOR.WA.gov.  More info and screenshots below.


If you have any trouble, call the DOR at 1.800.647.7706.  It's their job to help you file your taxes! 


How to Prepare - If You are NEW to This  :)

Reporting to WA is very similar to reporting to Seattle, but just a little more complicated. I recommend preparing for both at once.  Everyone's situation is a little different, so it's hard to give estimates or exact instructions.

Here's what I recommend:

1.  Schedule some prep time on your calendar in the next week
2.  Schedule a 30 - 120 minute block for tax filing, during the weekday, with a plan to call the state DOR if needed (they will walk you through this)
3.  Print out the Prep sheet below
4.  During your prep time, fill out as many numbers as you can on the Prep Sheet
5.  On your scheduled day, call the state to help you.  Be prepared to wait...have something fun to do while on hold.


Prep Sheet

Click on the image below, to get to a PDF to download.


A Little Info

Washington state collects three kinds of tax.  The Department of Revenue handles this.  

B & O Tax - Business and Occupation.  Every business has to pay this tax, though small businesses get a credit, so you might not owe any!  Different industries are taxed on business activities.  The percentages vary.  

Use Tax - This might apply to you. (Though I don't cover it in the screenshots below.) It's like sales tax for things you buy in other states.  For example, if you buy a computer in Portland, you'd be required to pay Use Tax in WA state for it.

Sales Tax - This is a tax that businesses collect and submit, versus a tax one pays.  If you're a (NON-Retail) Service provider, you don't have to collect this tax!  Click here to read about Services vs. Retail Service.  The DOR collects for both the state and the city/cities (referred to as local tax).


IMPORTANT NOTE - ONE

If you do not have an account yet with the DOR (Department of Revenue), you'll need to set one up.  A blog post is coming soon to show this. Meanwhile, here's what I can tell you.  

You will need your~
UBI - Unified Business Identifier, the # that WA state assigned to your business
and
PAC Code - I don't know what this stands for.  You can find it on most letters from the DOR, or if they sent you a paper form for Excise Tax.  

gFBADORLetterPACCode.jpg
gFBAPACCode2.jpg

IMPORTANT NOTE - TWO

By any chance, did the state assign you to make Quarterly reports?  Versus Annual reports?  This sometimes happens when self-employed folks register an LLC.  If you want to change from Quarterly to Annually, you must call the DOR (Department of Revenue) during the month of January.  And only in January!  The number is 1.800.647.7706.  If your annual Gross Sales are under a certain amount, they will make the change for you.


Screenshots ~ Making Your Report to the WA DOR

To get started, click here to go to the DOR.WA.gov.

 

Follow the circles.



Log In.

gFBADORReport2SeattleJennyGirlFriday.jpg

Click on File Return.  

gFBADORReport3JennyGirlFridaySeattle.jpg

Scroll down........look out for the categories that apply to you.  (And check out some of the others along the way!)

Enter the total Gross Sales in each box, next to the name of the category.

gFBADORReport4SeattleJennyGirlFriday.jpg
gFBADORReport5RJennyGirlFridaySeattle.jpg
gFBADORReport6RJennyGirlFridaySeattle.jpg

Hit Next.

Now you're on the State Sales & Use Tax 

Enter your Gross Sales in the Retail Sales box.  (This might be pre-filled out for you because of the previous screen.  This is collected for the state.  The screen shows the rate of 6.5%.

If you know that you owe Use Tax, put that amount as well.  (This is for items you bought out of state.  If you have questions, call the DOR.)

gFBADORReport8RJennyGirlFridaySeattle

This next page is for the Local Sales tax.  This money is collected on behalf of the city/cities where you sold products and retail services. 

> You'll need to add each city.
> For some, you'll need to give subtotals of gross sales in two different time periods.  

(Because the tax went up midway through the year.)  It shows the different rates to the right.

gFBADORReport9RJennyGirlFridaySeattle.jpg

If you know you'll owe Use Tax, add Seattle, then add your amounts.  (Sorry, I'm not going into detail here.  This doesn't apply to most people.)

gFBADORReportLUTSpJennyGirlFridaySeattle.jpg

Click NEXT through the following screens until you get to the confirmation page.

>> One exception, if you need to take TAX PAID at the SOURCE, it may be on one of these pages.  Sorry, I don't know where it is......

gFBADORReport11JennyGirlFridaySeattle.jpg
gFBADORReport12JennyGirlFridaySeattle.jpg
gFBADORReport13JennyGirlFridaySeattle.jpg
gFBADORReport14JennyGirlFridaySeattle.jpg

Finally, here we are.  It'll show your B&O tax, sales tax, local tax, use tax, etc. 

Also, any credits applied to you.  

Fill out your contact info to file.

If you owe any money, it'll direct you to a payment screen.

gFBADORReport15R.jpg

Payment screen.  The first one deducts directly from your bank account.

gFBADORReport16SPJennyGirlFridaySeattle.jpg

After you fill out your payment info, be sure you follow all the directions to Submit payment.  

Check for the buttons at the bottom of each screen. (Sorry, I forgot to grab those screenshots for you.)


Woohoo!  Confirmation screen.  If you paid any B&O tax, be sure to put a copy in your receipts file.

You can deduct these taxes when you do your Federal filing with the IRS.   (Sales and Use Tax is NOT deductible for IRS taxes.)

gFBADORReport17JennyGirlFridaySeattle.jpg

If you select "View Printable Return" this is what it looks like.

gFBADORReportConfSPJennyGirlFridaySeattle.jpg

Well done!  This will be way easier next year, now that you've been through it.

Please take a little moment to reward yourself.  Perhaps some nice chocolate, a walk outside, a glass of wine, or order dinner in tonight.

Cheers!
Jenny Girl Friday

P.S.  Did this help?  I hope so!  Pretty please share with any friends, or post on Facebook.  I think self-employed folks are keeping the soul in Seattle.  I want to make the chores of business easier, so you can all keep being awesome and shining your light.  

P.S. 2   Are you signed up for Sidekick Services via email?  Get reminders and links to how-tos delivered right to your email inbox.  :)

For Retail + Combo Businesses ~ How To Make Your Annual Report To The City Of Seattle (For B&O Taxes)

Hello + Note from July 2, 2018: The state has a new portal, which looks a little different. I'm hoping to add screenshots of the new one sometime soon. Meanwhile, this post will still give you a good idea of the process. Thanks for your patience!


Does your work include: retail, retail-service, wholesale, manufacturing, or royalties. Or a combination?

Then this post is for you!

If your business is NON-retail SERVICE only, click here to see a different walkthrough.


Due: January 31st
Time Required: 2 - 8 minutes to file
Frustration Factor: If you use the SELF Portal, 3 out of 10.  If you use the FileLocal, 6 out of 10.
Cost/Taxes Due:  If you earned under $100K (gross sales), then you will not pay any taxes to Seattle.  To read about tax rates for over $100K with Seattle, click here.
Type of Tax:  B&O (business and occupation)
With: City of Seattle
Use:  Seattle SELF Portal (Recommended).........or FileLocal-wa.gov.

If you need help, call the city at:  206.684.8484


Summary

1.  Log in to Seattle SELF Portal or FileLocal-wa.gov
2.  Find that business categories that apply to you:  retail, wholesale, service, printing, manufacturing
3.  Fill in total sales for each category
4.  Hit next until the end, confirm
5.  If you earned over $100K in total gross sales, complete the payment screens

One Note:  The state collects sales tax for Seattle.  So if you have to submit sales tax, you'll do that through the WA state DOR, Department of Revenue.

Some Screenshots below.


How to Prepare - If You are NEW to This  :)

Reporting to Seattle is very similar to reporting to the WA state DOR. I recommend preparing for both at once.  Everyone's situation is a little different, so it's hard to give estimates or exact instructions.

Here's what I recommend:

1.  Schedule some prep time on your calendar in the next week
2.  Schedule a 20 - 40 minute block for tax filing, during the weekday, with a plan to call the city if needed (they will walk you through this). This is includes buffer time.
3.  Print out the Prep Sheet below
4.  During your prep time, fill out as many numbers as you can on the Prep Sheet
5.  On your scheduled day, give it a try.  If you have to call the city, be prepared to wait...have something fun to do while on hold.


A Prep Sheet for reporting to the City + State

Click on one of the images for a form to download.  2 pages.


If you understand these terms, then great. :)  Fill it out to get ready for your call to the city.

If you DON'T understand what these all mean.  It's okay!  Call the city to arrange to get some help.  (Or, get in touch for a one-time consult with me.)


Option One - Screenshots with the Seattle SELF Portal (Recommended)

This portal is being phased out...........scroll down to see Screenshots with FileLocal-wa.gov, the new portal.

Click here to go to the SELF Portal

gFBASELFReportSeattle2.jpg
gFBASELFReportSeattle3.jpg
gFBASELFReportSeattle4.jpeg
gFBASELFReportSeattle5.jpg
gFBASELFReportSeattle6RJennyGirlFriday.jpg
gFBASELFReportSeattle7JennyGirlFriday.jpg
gFBASELFReportSeattle8.jpg
gFBASELFReportSeattle9JennyGirlFriday.jpg
gFBAFileLocalReport1.jpg
gFBAFileLocalReport2.jpg

The directions say to choose the last month of the period you're filing for.

With Annual Reports, choose December of the last year.

gFBAFileLocalReport3JennyGirlFriday.jpg

It took a few seconds for these drop down menus to work.  Choose "Seattle B&O tax form" and your Main branch.  (Or whatever you named it.)

gFBAFileLocalReport4JennyGirlFriday.jpg

Fill in each box relevant to your business.

The total sales in each category, NOT including any sales tax that you collected.

gFBAFileLocalReport5R1JennyGirlFriday.jpg

This is a second view of the same screen.  Note, this symbol means a (confusing) worksheet is about to pop up.

It includes boxes for Royalties and NON-Retail Services

gFBAFileLocalReport5.jpg

Some questions.  Note:  you are NOT an employee.  You are the business owner.

gFBAFileLocalReport6JennyGirlFriday.jpg

Royalty information~ enter in the box circled in Orange.

Non-Retail Services, enter in two places.  

1.  Line 1 for Worldwide Gross Service Receipts.  (Worldwide!!!)

2.  Line 7 for Seattle Service Receipts

If you did all your work in Seattle, these should be the same.

Notice, the form will fill in some numbers for you.....

gFBAFileLocalReport7RJennyGirlFriday.jpg

A shot after this screen is filled in.  You can only change the numbers in White.

gFBAFileLocalReport9JennyGirlFriday.jpg

This example shows gross sales + taxes in three categories.

Note, no tax is due............because this person earned under $100K.

gFBAFileLocalReport10RJennyGirlFriday.jpg

gFBAFileLocalReport11JennyGirlFriday.jpg

gFBAFileLocalReport12JennyGirlFriday.jpg

Eventually, this screen pops up as a confirmation.  Hurray!  Success!!!!!

gFBAFileLocalReport16.jpg

FYI - the first 3 times I tried, I got this error message.  I waited a few days, and tried again and it worked!  One good thing........FileLocal had kept all my numbers, so I just had to move through all the screens.

gFBAFileLocalReport15JennyGirlFriday.jpg

Well done!  Phew!  One thing about reporting to the city is that it forces us to know our total sales number.  I find that kind of rewarding, how about you?

One more hoop of tax season is all done.  Be sure to give yourself a little or even medium reward!  Perhaps some Theo's chocolate, some yummy juice from HeartBeet, or a trip to Ladywell's.  

: )  Jenny Girl Friday

P.S.  Did this help you?  Pretty please share with any friends, or post on Facebook.  I think self-employed folks are keeping the soul in Seattle.  I want to make the chores of business easier, so you all can keep being awesome.  

P.S. 2 Are you signed up for Sidekick Services via email?  Get reminders and links to how-tos delivered right to your email inbox.  :)

For Service Providers ~ How To Make Your Annual Report To The WA DOR (For Excise Taxes)

Good news!  This is actually a fairly easy and very quick task....when you know what to do.  It will mostly likely take you longer to read this blog post than to make your report!

Having said that, lots of people get really tripped up.  This is because the tax form (online or paper) has a few hundred boxes.  It's used to tax every type of business, which all have different tax rates.  Thank goodness,  only one box actually applies to you.  

Due: January 31st
Time Required:  2 - 8 minutes
Frustration Factor:  2 out of 10
Cost/Taxes Due:  $0 if you earned under about $45K.  Over $45K, it can be a few hundred dollars to a thousand or more.
Type of Tax:  B&O - business and occupation
(And Use Tax if applicable, though this is not covered in this blog post. One is coming soon.)
With:  The Washington state DOR, Department of Revenue

Click here to go to the DOR.WA.gov  OR, read on for more information and screenshots.


Summary of the Task

1. Log in
2. Find the ONE correct box for Services
3.  Enter your gross sales
4. Click next through several screens
5.  Confirm
6.  Pay, if required

If you have any trouble, call the DOR at  1.800.647.7706.  It's their job to help you file your taxes!


A Little Info

Washington state collects three kinds of tax.  The Department of Revenue handles this.  

B & O Tax - Business and Occupation.  Every business has to pay this tax, though small businesses get a credit, so you might not owe any!  Different industries are taxed on business activities.  The percentages vary.  

Use Tax - This might apply to you. (Though I don't cover it in the screenshots below.) It's like sales tax for things you buy in other states.  For example, if you buy a computer in Portland, you'd be required to pay Use Tax in WA state for it.

Sales Tax - This is a tax that business collect and submit, versus a tax one pays.  If you're a (NON-Retail) Service provider, you don't have to collect this tax!  Click here to read about Services vs. Retail Service.


IMPORTANT NOTE - ONE

If you do not have an account yet with the DOR (Department of Revenue), you'll need to set one up.  A blog post is coming soon to show this. Meanwhile, here's what I can tell you.  

You will need your~
UBI - Unified Business Identifier, the # that WA state assigned to your business
and
PAC Code - I don't know what this stands for.  You can find it on most letters from the DOR, or if they sent you a paper form for Excise Tax.  

gFBADORLetterPACCode.jpg
gFBAPACCode2.jpg

IMPORTANT NOTE - TWO

By any chance, did the state assign you to make Quarterly reports?  Versus Annual reports?  This sometimes happens when self-employed folks register an LLC.  If you want to change from Quarterly to Annually, you must call the DOR (Department of Revenue) during the month of January.  And only in January!  The number is 1.800.647.7706.  If your annual Gross Sales are under a certain amount, they will make the change for you.


Screenshots ~ Making Your Report to the WA DOR

To get started, click here to go to the DOR.WA.gov.

 

Follow the circles.



text

gFBADORReport2SeattleJennyGirlFriday.jpg

text

gFBADORReport3JennyGirlFridaySeattle.jpg

Scroll down........nearly to the bottom.  On your way, check out all the different industries being taxed!

gFBADORReport4SeattleJennyGirlFriday.jpg
gFBADORReport5SP.jpg
gFBADORReport6SPJennyGirlFridaySeattle.jpg

Enter your Gross Sales in the box next to "Service and Other Activities, Gambling Contests of Choice (less than $50,000 a year)".  

Isn't that kinda funny!  Gross Sales means total amount of money collected from clients, before any deductions.

Hit Next.

gFBADORReport7SPJennyGirlFridaySeattle.jpg

Keep hitting NEXT through 7 or so screens........until you get to Summary and Payment.  

Again, along the way, check out some of the funny tax categories.  (Liter, "little cigars", syrup?)


gFBADORReportSTSPJennyGirlFridaySeattle.jpg
gFBADORReportLSTSPJennyGirlFridaySeattle.jpg
gFBADORReportLUTSpJennyGirlFridaySeattle.jpg
gFBADORReport11JennyGirlFridaySeattle.jpg
gFBADORReport12JennyGirlFridaySeattle.jpg
gFBADORReport13JennyGirlFridaySeattle.jpg
gFBADORReport14JennyGirlFridaySeattle.jpg

Finally, here we are.  It'll show your B&O tax.  Also, a credit applied to you.  Fill out your contact info to file.

If you owe any money, it'll direct you to a payment screen.

gFBADORREportSPFinalJennyGirlFridaySeattle.jpg

Payment screen.  The first one deducts directly from your bank account.

After you fill out your payment info, be sure you follow all the directions to Submit payment.  

Check for the buttons at the bottom of each screen. (Sorry, I forgot to grab those screenshots for you.)

gFBADORReport16SPJennyGirlFridaySeattle.jpg

Woohoo!  Confirmation screen.  If you paid tax, be sure to put a copy in your receipts file.  

You can deduct these taxes when you do your Federal filing with the IRS.

gFBADORReport17JennyGirlFridaySeattle.jpg

If you select "View Printable Return" this is what it looks like.

gFBADORReportConfSPJennyGirlFridaySeattle.jpg

Well done!  This will be way easier next year, now that you've been through it.

Please take a little moment to reward yourself.  Perhaps some nice chocolate, a walk outside, a glass of wine, or order dinner in tonight.

Cheers!
Jenny Girl Friday

P.S.  Did this help?  I hope so!  Pretty please share with any friends, or post on Facebook.  I think self-employed folks are keeping the soul in Seattle.  I want to make the chores of business easier, so you can all keep being awesome and shining your light.  

P.S. 2   Are you signed up for Sidekick Services via email?  Get reminders and links to how-tos delivered right to your email inbox.  :)

Service Businesses....vs.....RETAIL Service Businesses

Did you know ~ some service businesses are considered retail...and have to collect sales tax?

Generally speaking, retail services include any service work that improves a physical thing—such as:  painting a house, repairing jewelry, washing cars.  This can also apply to people.  For example, the following businesses are considered retail:  tattooing, sight seeing, personal training.

In some cases, the line between service vs. retail service is a little fuzzy, or perhaps arbitrary.  

For example, if you teach yoga in a gym, with the goal of improving one's physical health, it's considered retail.  If you teach yoga as a spiritual practice, it is NOT considered retail.

Sometimes, businesses might offer a combo of NON-retail services and retail services.  

For example, Meghan is a color consultant.  She helps home-owners choose paint colors for their homes, both exteriors and interiors.  This is a NON-retail service, because she's providing ideas, and isn't physically interacting with the house.  Sometimes, Meghan helps with decorating too...by hanging up paintings + curtains, repainting bookshelves.  In these cases, she's offering a retail service.

To learn more, call the WA state DOR* 800.647.7706 or read here

 

Cheers!

Jenny Girl Friday

 

*Department of Revenue

How to Fill Out + Send 1099-MISC forms

gFBA1099AllthingstoMAILseattlejennygirlfriday.jpg

If you paid any Independent Contractors more than $600 in one year, for service work, you need to submit a 1099-MISC form (1099 for short).....both to the Recipient and to the IRS.  To read more, click here.  

Time Required: 5 - 10 minutes per form (+more time if you have to collect W-9s)
Cost: About $1.50 in postage to IRS + any postage costs to mail to recipients
Due: January 31st
Frustration:  3 out of 10
Tedium Factor:  10 out of 10

Summary

On a half sheet form, you fill in a few boxes.  Your name, address, phone number, and tax ID number.  Your recipients name, address, tax ID number.  The amount you paid them.

You send a copy to the recipient, to the IRS, and you keep one for yourself.

In addition, you must work with two more forms. A 1096 acts as a cover sheet when mailing 1099-MISCs to the IRS.  Use W-9s to collect information from recipients. More below....

Photos with notes below.  First some information.

You can choose to use paper forms or to file electronically.  

Paper forms are carbon and MUST be ordered from the IRS or another source.  They canNOT be printed. To ORDER forms, click here.  To see a walkthrough of ordering forms, click here.

I haven't worked with e-filing yet.  Some tax software systems provide this, such as TurboTax.  The IRS also gives this tip, "To locate an IRS business partner who may be able to offer low-cost or even free filing of certain forms, enter "e-file for business partners" in the search box on IRS.gov."

Some accountants will also do this for you.

What you need~

For each recipient:
• Full legal name (of the person)
• Legal name of the business
• Address
• Tax ID Number ~ Either their SSN (social security number) or EIN (employer ID number)
• Amount you paid them ~ called "Nonemployee compensation"

If filing with paper forms:
• 1096 Form
• Large Envelope
• Postage
• Black ball point pen

Use this prep sheet to keep things straight!  Click on it to get a PDF.  :)  This will also help when it's time to file your IRS taxes later this Spring.

Heads Up!  There are two more forms to know about!  1096 and W-9 

Like the Charlie's Angels, there are actually 3 forms that you'll be working with!  They always go together.

W-9 The IRS created a W-9 form to collect the required information from recipients, including their tax ID.  It's a one page form with lots of pages attached.  As you can imagine, tax ID numbers are sensitive information, and W-9 forms must be stored securely.  You can collect W-9s on paper, or electronically.  Click here to download from the IRS.gov site.

1096 This is like a cover letter.  When you submit certain types of forms to the IRS, they want a 1096 as well.  It's basically a summary of everything you're sending in.

Important Things to Know When Filling Out Paper Forms!

1.  Use a BLACK ball point pen, press hard!
2.  Use legible, block printing
3.  Do NOT add any symbols.  NO dollar signs, NO apostrophes, NO number signs.
For Susie's Flowers, you'd write:  Susies Flowers
For an apartment #302, write APT
4.  Do NOT cut the 1099 forms
5.  Write the dollars + cents for all amounts.  For example, 1235.00 is correct.  (1235 is NOT correct.)

> > If you happen to make any mistakes, check the VOID box at the top of the form, and start again.

Mailing Information

• Address for Washington Residents:

Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999

• You must use a FLAT envelope, with no folds.

• It must be postmarked on or before January 31, 2018.

1099-MISCs Forms

Two separate forms are on each page.  This shows the top sheet which is sent to the IRS.  Do NOT cut this page.  The pages underneath are torn in half before giving to the recipients.

gFBA1099FilledOut.png

Notice the names.  It's important to write both the recipients full legal name AND the business's legal name.

 

gFBA1099FilledOutNote1.png

Whenever a business is a Sole Proprietor or Single Member LLC, you may use either the SSN (social security number) OR an EIN (employer identification number).

This example shows the Payer having an EIN.
The recipient using their SSN.

On the bottom form, I made a mistake!  I used a # sign.  This is not allowed, so I stopped filling it out and marked the VOID box.

gFBA1099FilledOutNote3.png

After they are filled out, tear the strip off and separate the forms.

gFBA1099TearAway.jpeg

Look for THREE to keep, and do the following:

1.  For the IRS - send in the mail, in a flat envelope
2.  For Recipient - send in the mail, may be folded
3.  For Payer - keep in your tax records

gFBA1099ThreeForms.jpg

Here's a look at the 1096 Form.

Moving from left to right with notes:

1.  Be sure to check the box 1099-MISC.
2.  Use your EIN ....OR.....your SSN.  (Not both)
3.  Number of forms.  Put the number of filled out 1099-MISCs.  There are two per page.  If you filled out for 3 recipients, you're write "3".
4.  "Total amount reported with this Form"  Add up the total of all dollar amounts on all forms.  If I was reporting $2100 for a coach and $1400 for a designer, I would record $3500 in this box.

gFBA1096FilledInNotes.png

Finishing up!

To the IRS - one 1096 forms plus the top copies of all 1099-MISCs
To the recipients - their 1099-MISC copy
For your records - full page copies

gFBA1099AllthingstoMAILseattlejennygirlfriday.jpg

Well done!  Bravo!  Even though the contents of this are straightforward, it can feel so taxing because it takes a lot of care and attention, yet it is boring.  In addition, just the thought of the IRS can be triggering or get the adrenaline going.  ♥ If you can, find a time to relax a bit.  Perhaps a bath, a trip to Ladywell's, a long walk, even a short walk around the block.

Also, remember to check off of your Cheat Sheet / Sticker Chart!

Cheers!

: )  Jenny Girl Friday

Estimated Quarterly Payments to the IRS - What are they? Do I have to send them? How do I calculate payments?

What are estimated quarterly tax payments to the IRS?  Why do I have to send them?

gFBACheckImageEQ$Form1040-ES.png

Our federal taxes are a "pay-as-you-go" system.  When you're an employee, federal taxes are taken out of each check.  If you are self-employed, the IRS requires that you send in tax payments throughout the year.  For the smallest business, this is required 4 times.  (Larger businesses may have to end in more often.)

I just had to make a report to Washington State and send in Sales Tax.  Is this the same thing?

Great question and No.  Every level of government wants to tax you...and it's easy and reasonable to get them confused.

Washington State - collects Sales Tax, B&O tax, and Use Tax.  Some businesses report annually, some report quarterly.

The Federal Government (IRS) - collects Income and Self-Employment Tax.  We file an annual report, but we're asked to send in estimated tax payments throughout the year.

This post is about tax payments to the IRS.

Do I have to send in the estimated quarterly payments (EQ$) to the IRS?  What happens if I don't?

Technically speaking, YES—the letter of the law is that if a person is doing business, they must send payments in each quarter.  In some cases, if you don't send in your EQ$, you'll have to pay a penalty.  

The reality: I've met many self-employed folks who did not send in their EQ$ the first year, and they had no penalties, or the penalties were very low.  Having said that, the IRS may choose to more vigorously enforce this rule at any time.  

In some cases, if your income is low enough, it is allowable to NOT send in payments.  To see if this applies to you, click here to read more (scroll down to page 24), or call the IRS at 800.829.4933

How do I calculate payments?

If you filed business taxes last year, usually your tax preparation software or accountant will provide you with a recommended amount for you to pay.  It'll be based off of your earnings for the previous year.

If you are a brand new business, you'll need to calculate an amount to pay.  There's a formula and worksheet below.

An important note:  it's common for new businesses to grow quite a bit from year to year! Because of this, the estimate made for the quarterly payment can be too low.  ProTip:  Always transfer 30% of all business deposits into a savings account for taxes you may owe.  (40% if you collect sales tax.)  If what you're saving is more than what your EQ$ require, you can either....send in extra money for each EQ$.  OR, hold the money in your account until you file your federal taxes.

Simplified Formula for Calculating EQ$ + Worksheet

Click on the worksheet for a PDF version for download.

1.  Estimate your Gross Sales - all the money you'll collect from buyers/clients.  (Never include Sales tax in the amount.)
Example:  $12,000

2.  Estimate your costs of doing business.  
Example:  $3000

3.  Subtract the costs of business from your Gross Sales.
Example:  $12,000 - $3000

4.  The answer is your Profit or Income.
Example:  $9000

5.  Estimate your tax owed.  Multiply your profit by .30.
Example:  $9000 x .3 = $2700

6.  Divide tax owed by 4.  This is the amount to use for your EQ$
Example:  $2700 / 4 =$675

When are they due?  How do I send them in?

They are due on the following dates each year.  If a date falls on a weekend or holiday, the deadline is extended to the next business day.

January 15
April 15
June 15
September 15

You may submit payments electronically or through snail mail.  Click here to read more on How To Submit EQ$.

ProTips + Doing Yourself a Favor

ProTip:  Each year after you file taxes, print off all your Payment Vouchers.  Find four envelopes and put stamps on them.  Put these vouchers + envelopes in a visible place, for example, pin to a bulletin board, set on your bookshelf, or clip to your fridge.

ProTip:  Add these dates to your calendar right now:  Jan 1, Apr 1, Jun 1, Sep 1.  Prep and send your payments on these days.

Do yourself a favor and send these payments in!  If you skip these payments, it can be very tempting to spend the money from your account......leaving you high and dry next April!  In addition to making your future brighter, it can feel very satisfying to mail the checks, and gives peace of mind right now.  

 

Happy Working,

Jenny Girl Friday


Read more on the official FORM 1040-ES info sheet on the IRS.gov site.

For Service Providers ~ How to Make Your Annual Report to the City of Seattle (for B&O Taxes)

Good News!  For MOST people, this hoop is easy and free.  :)

If your business is strictly service-oriented...and NON-retail, it's pretty easy to make your report to the city and to the state. 

If you are a retail business, or a combination of service + retail, click here to read a different walkthrough.  (Coming soon.)  To learn more about Service vs. Retail Services, click here.

Due: January 31st
Time Required: 5 - 30 minutes
Frustration Factor: If you use the SELF Portal, 2 out of 10.  If you use the FileLocal, 6 out of 10.
Cost/Taxes Due:  If you earned under $100K, then you will not pay any taxes.  To read about tax rates for over $100K with Seattle, click here.
Type of Tax:  B&O (business and occupation)

Summary of the Task

1. Log in
2. Find the ONE correct box in the SELF portal.
   Or, the 2 - 3 boxes in the FileLocal portal.
3.  Enter your gross sales.
4. Click next until you're done.

Here's what you'll need to get ready:

• Gross Sales—The total amount of money you collected from your work.  (That's it, no need to figure out deductions yet.)  Can also referred to as Gross Service Receipts.
• Log In + password to either FileLocal or the Seattle SELF Portal.

Note:  If you don't have a FileLocal or Seattle SELF Portal account, you'll need to set one up.  The SELF portal is getting phased out, so the city is encouraging everyone to use the FileLocal.  It takes some time to create this account, because FileLocal wants all of your numbers (UBI, EIN, etc.  Click here to learn more.)

Recommendation + Note

The Seattle SELF Portal is more straightforward, so if you have that account, I suggest using it.

When I used the FileLocal portal, I got an error message at the end.  I'll be calling the city next week, and will add notes once I know more!

Screenshots of both are below.  You can pick which one you want to use.

>> If you get stuck, or if something doesn't work, call the city at 206.684.8484.

Option 1 - Making Your Report Using the Seattle SELF Portal

The start, click here to go to the Seattle SELF Portal

gFBASELFReportSeattle1.jpg

Find your business, and click on it.  Note, if you're a sole proprietor, your own personal name is your business's legal name too.

gFBASELFReportSeattle2.jpg
gFBASELFReportSeattle3.jpg
gFBASELFReportSeattle4.jpeg

For some reason, I always have to read this question a few times!

If you earn LESS than $100K, click Yes.

gFBASELFReportSeattle5.jpg

Enter your total Gross Sales in this box, and then click Next.

gFBASELFReportSeattle6.jpg

This is your confirmation page.  If everything looks good, hit Submit.

gFBASELFReportSeattle7.jpg
gFBASELFReportSeattle8.jpg

You'll get a screen that I forgot to capture....if offers you a chance to Print your Confirmation page.  Also, you should get an email confirmation too. 

ProTip:  Set up an email folder for all Legal + Tax stuff.

Voila!  You're all done!  :)

gFBASELFReportSeattle9.jpg

Option 2 - Making Your Report Using FileLocal

Click here to go to FileLocal.

gFBAFileLocalReport1.jpg
gFBAFileLocalReport2.jpg

For ANNUAL filers (most or all of you) ... we select December of the desired year.

gFBAFileLocalReport4.jpg
gFBAFileLocalReport5.jpg

After you answer these questions, the worksheet will expand.  Note:  you are NOT an employee; you're the owner.

gFBAFileLocalReport6.jpg

As far as I can tell, you need to enter your Gross Sales (or Gross Service Receipts) in two places:

- Total Worldwide
- Total Seattle

If you did all your work in Seattle, these should be the same. 

If you worked in different cities, I suggest calling the city  to walk you through this part.  206.684.8484

Here's the same worksheet with some numbers filled in.  Enter the amounts in lines 1 and 7.  The worksheet will populate with more numbers.

Line 12 says, "Seattle Taxable Receipts".  This should match the amount of total sales for your business that happened in Seattle.

(Little note:  I apologize if these notes sound confusing.  I found this form to be surprisingly non-intuitive compared to past forms, and am still trying to wrap my own head around it.  Remember, if you get stuck, call the city!)

After you hit "continue" it takes you back to the screen you were on.

Where the pink lines are, it shows my Total Sales ......and then the tax due.  Your tax due will be ZERO if you earned less than $100k.   Note: I'm not sure why there's an amount here for me.  Perhaps it calculated the tax, but it didn't make me pay it? ...because I earned under $100K?

Review, and if things look good, hit Next.

When everything looks good, hit File Now.

Note ~ The first two times I hit Yes, I got an error screen!  I waited a few days, tried again....I logged in, all my numbers were still there, and then it worked!  Who knows why.

Here's what the confirmation page looks like, plus you'll get an email confirmation. 

gFBAFileLocalReportDoneScreenNotes.png

Well done!  One important hoop is over.  Reporting your gross sales is a great moment ... you get to see all of the business you accomplished over the last year.

: )  Jenny Girl Friday

P.S.  Did this help?  I hope so!  Pretty please share with any friends, or post on Facebook.  I think self-employed folks are keeping the soul in Seattle.  I want to make the chores of business easier, so you can all keep being awesome and shining your light.  

P.S. 2   Are you signed up for Sidekick Services via email?  Get reminders and links to how-tos delivered right to your email inbox.  :)

Renew Your Seattle (City) Business License - December 31st

A friendly reminder ~ all self-employed folks need to have two business licenses, one from the state and one from the city.  

gFBACitySeattlebusinesslicenseJennyGirlFriday.png

This post is about renewing your business license with Seattle. (It's longer name is Business License Tax Certificate.)  To read more about it, go to:  seattle.gov/licenses/get-a-business-license.  [Post coming soon about state business licenses.]

Your city business license is the one with the year printed diagonally across ... and the Seattle symbol in the corner.

 

 

 


Due:  December 31st (each year)
Time:  5 minutes
Frustration:  2 out of 10
Cost:  $55 if you make under $20K annually,
          $110 if you make over $20K
+Fees:  $2 - 7 for processing credit cards

Note:  There is a grace period until January 31st.  After that, a late penalty applies.

gFBASeattleLicenseRenewalMail1JennyGilrFriday.jpg

you have 2 options for renewing your license.  

Renew through the mail.

Hopefully, you've received a renewal form in the mail.  If not, and prefer to renew this way, call the city at: 206-684-8484.  Or email them at: tax@seattle.gov

Online ~ FileLocal Portal - This is the new portal.

If you've already created your account, it's pretty easy to renew your license.  If you haven't set up your new account, read this article, and plan an extra 20 - 30 minutes for that step.  Instructions and screenshots below for renewing your license.


Renew with FileLocal

If you need to set up your account, read this article first.  Allow 20 - 30 minutes.

1.  Sign in to FileLocal
2.  Select Renew A License
3.  Now you're in the Activity Center.  It should have "Renewals and Applications" set as the "TYPE" of activity, with your business information below.  [If not, adjust as needed. Call FileLocal if you need help 1.877.693.4435  Select Continue.
4.  Continue through screens to confirm your information.  Then look for the "READY TO PAY" button.
5.  Look for the HOW ARE YOU PAYING tabs.  It's set on Bank Account.  You can use that, or select the tab for CREDIT CARD.
6.  Complete the checkout process.
7.  Print a copy for your records.  (It's an expense/deduction.)  Or, save a pdf and put into special folder.
8.  Check this off your Tax Season List!

 


 

gFBARenewLicenseFileLocal1JennyGirlFriday.jpg
gFBARenewLicenseFileLocal2JennyGirlFriday.jpg
gFBARenewLicenseFileLocal5JennyGirlFriday.jpg
gFBARenewLicenseFileLocal6JennyGirlFriday.jpg
gFBARenewLicenseFileLocal7JennyGirlFriday.jpg
gFBARenewLicenseFileLocal8JennyGirlFriday.jpg
gFBARenewLicenseFileLocal9JennyGirlFriday.jpg
gFBARenewLicenseFileLocal10JennyGirlFriday.jpg
gFBARenewLicenseFileLocal11JennyGirlFriday.jpg
gFBARenewLicenseFileLocal12JennyGirlFriday.jpg
gFBARenewLicenseFileLocal13JennyGirlFriday.jpg
gFBARenewLicenseFileLocal14JennyGirlFriday.jpg
gFBARenewLicenseFileLocal15JennyGirlFriday.jpg
gFBARenewLicenseFileLocal16JennyGirlFriday.jpg

Well Done!  One more Hoop accomplished / one more thing checked off your TAX Season checklist! 

♥   ♥   ♥   ♥   ♥   ♥   ♥   ♥   ♥    

Are you already signed up for Sidekick Services?  Get tax and license reminders delivered right to your Email Inbox, so you can stay current + feel peace of mind all year long.  Did this article help you?  Please share with a friend or two, or 5!

{I'm on a mission to help every self-employed woman* in Seattle get the support she needs to be awesome.}

Cheers!  Jenny Girl Friday

 

How to Order 1099-MISC Forms (free!)

gFBA1099sEnvelopes.jpg

Not sure if you need 1099-MISC forms?  Read about them here.

When:  Order in Nov or Dec
Forms Due:  January 31
Estimated Time:  3 minutes
Cost:  Free
Frustration Factor:  1 out of 10


If you plan to use paper 1099-MISC forms (1099s for short), you'll need to order them from IRS.gov.  It's not possible to simply print them off ... because they are carbon forms. 

Here are the steps.  There are screenshots are below.

1.  Go to IRS.gov
2.  Select "Forms & Publications" ~ Top right side
3.  Select "Order Forms and Pubs" ~ Left side
4.  Select "Online Ordering for Information Returns and Employer Returns"
5.  Scroll Down to see chart of forms
6.  Notice there are two empty boxes for each form ~ one is for 2017 forms, the other is for 2018 forms
7.  Keep scrolling until you see 1099-MISC
8.  Put the desired number of forms that you need in the left box, for 2017 forms
9.  Put a number 1 next to the Instructions
10.  Scroll down to the bottom and select "Add to Cart"
11.  Follow the checkout process


The first picture starts on the "Order Forms and Pubs" page.

gFBAirsOrderFormsJennyGirlFridaySeattle.png

The Chart of Forms - The actual chart is longer than what's shown here.

gFBAirsOnlineOrder1JennyGirlFridaySeattle.png
gFBAirsOnlineOrder2JennyGirlFridaySeattle.png
gFBAirsOrder1099sJennyGirlFridaySeattle.png
gFBAirsOrder1099sAddJennyGirlFridaySeattle.png

The beginning of the checkout process.

gFBAirs1099sCartJennyGirlFridaySeattle.png
gFBAIRSCheckout1099sJennyGirlFridaySeattle.png
gFBAirsConfirm1099sJennyGirlFridaySeattle.png
gFBAirsThankYou1099sJennyGirlFridaySeattle.png

To read about 1099s + w-9s, click here.  (Coming soon.)
Need help filling out your 1099s?  Click here.  (Coming soon.)

Great job staying on top of things for tax season!

♥ Jenny Girl Friday


Would you like to receive friendly reminders for tax season ... delivered right to your inbox?  Sign up for Sidekick Services!  Asking for a small annual donation.

What are 1099s? Do they apply to me?

gFBA1099MiscCloseUp.jpg

Whenever people are getting paid, or earning money, the IRS wants to know about it!  

They have created a variety of forms to do just that.  Just like a w-2 form is used to track an employee paycheck, 1099s are used to report other kinds of income.

Most often, when people say 1099, they are referring to a 1099-MISC  

This refers to miscellaneous income—which is any time someone is paid for a service, and they are NOT an employee.  For example, let's say Molly starts to teach yoga at her neighborhood studio, just one time a week.  They pay her for each class, but do NOT hire her as an employee.  At the end of the year, they would report all her earnings on a 1099-MISC.

As a self-employed person, it's common to both give and receive 1099s

For example, if you hire a photographer to do headshots for your website, or a designer to create a logo for you, or a bookkeeper to help you out, you'd likely have to give them 1099-MISCs at the end of the year.  (More on criteria below.)

If you provide a service to someone or a business, then you would receive a 1099-MISC, if you meet the criteria.

[Note ~ 1099-MISCs have a partner form, the w-9.  It's used to get someone's tax id number, either their social security number or employee identification number.  Read more about w-9s here.  (Coming soon.)]

The term 1099 + how the cool kids use it

It's important to know that there are a variety of 1099 forms, all with different suffixes and different purposes.  For example, you might have gotten a 1099-INT from your bank.  The INT refers to interest.  Also, sometimes people use the term as a verb or adjective, as in – Did you have to 1099 him?  Or, is it a 1099 job?  I think this is part of being the cool kids, but I could be mistaken...  ;)

Criteria, or, when to involve a 1099-MISC

For our purposes, we involve a 1099-MISC when...

- An independent contractor...
- Earns over $600 in one year...
- For service work.

To read about more situations, click here to read about 1099-MISCs on the irs.gov site.

Any time an individual—who's not an employee—is paid for a service, they are considered an independent contractors (IC).  Sole proprietors and single-member LLCs are both considered ICs.  It can also be a person without a business license, such as a neighborhood teen who mows your lawn all year round.

Some things to know ~

• You can order the 1099-MISC forms from the IRS for free, or you can purchase at office supply stores.

• Order or purchase these early!  They can run out.  Add to your November or early December calendar.

• If you fill out by hand, they will be carbon forms.

gFBA1096FormJennyGirlFridaySeattle.jpg

• You must provide a copy to the Independent Contractor and to the IRS.  Currently, the due dates for these are the same. (Sometimes they vary.)
    - Copies due to the Independent Contractors January 31st.
    - Copies due to the IRS January 31st.

• 1099s are usually accompanied by a 1096 form.  The IRS will send this automatically to you if you order from them.  Do not be alarmed!  It is very simple, and acts like a cover letter.  You DO need to send it in, along with the 1099s.


More Help with 1099-MISCs

• To order 1099-MISCs from IRS.gov, click here.
Click here to see a walkthrough of ordering
• 1099s have a partner, the w-9.  To read more on this, click here.  (Coming soon.)
• Meet the the 1096 form, like a cover page for 1099s.  (Coming soon.)

1099s are good things!

If you're receiving a 1099, it means you got paid for something in the last year!  If you're giving them out, it means you hired someone to help you or your business.  These are good things!  Whenever you're working with 1099s, it's nice to remember the experiences they represent.

Happy Working,

♥ Jenny Girl Friday

 

How to Set Up Your Business in Seattle - As a Sole Proprietor

gFADaVinciBlogSelfEmployedinSeattleJennyGirlFriday.jpg

Opening a business as a sole proprietor is the quickest way to achieve lift off!  ….Because, there is no business entity to create.  In legal and tax terms, you and the business are the same.  You simply to need to apply for some licenses, and possibly some permits.

(Not sure if you want to be a sole proprietor?  Read Sole Proprietor or LLC:  Which is Best for Me?)

Making things official is a great way to build momentum.  I encourage you to get your licenses at any time!  You can work on the other things later.  

Let your dream take flight!  (Is that too many metaphors?)


Pro Tip:  Get a journal to record all your log-ins, passwords, IDs, and various notes as you go through the process.  Use in the future for all research and calls related to taxes and licensing. Read more in Make Your Life Easier! - Simple Tips For Keeping Track Of License And Tax Stuff

1) Apply for your state business license.

Through:  Washington State Business Licensing Service (BLS)
Click here to Apply for a state license page on BLS.WA.gov
Cost:  $19 plus $5 for each DBA
Time:  15 - 20 minutes

2) Apply for your city business license.

Through:  City of Seattle Business
Click here to go directly to registration
Cost:  $110 for standard, $55 if you plan to make under $20K.
Time:  15 - 20 minutes

That's it!  You're in business.  …but you're not quite done.  To be legal, you need to ensure that you have all of the special permits and licenses for your line of business. 

3) Optional ~ Apply for an EIN

EIN stands for Employer Identification Number.  It's a tax ID number assigned to businesses by the IRS.  If you are a sole prop or a single-member LLC, you are allowed to use your SSN for business purposes.  Having said that, banks and online forms will often required you to have an EIN.  The issue is that the number formatting is different.  With your social security number, it looks like 000-00-0000.  With an EIN, it looks like 00-0000000. 

Good news!  It's easy, free, and only takes 10 minutes.  Here's the link:  Get EIN on IRS.gov.  Or, go to IRS.gov and search for EIN.  Heads up, this web service is only available during the daytime.

4) Do your due diligence.

At the state level, check the List of Licenses 
This is a list by trade, with links to relevant licensing agencies.  
Here's the list of Endorsements required by some businesses.
Or, call the BLS:  1-800-451-7985

And, at the city level, check the Regulatory Endorsements page.
Or, call the City of Seattle:  206.684.2489

Another nice tool is the WA Business Hub.  It's created to walk anyone through the setting up a business.  There's a TON on there.

5) Celebrate!

 

* * Please note:  The intent of this post is to get you started!  And, to provide you with the required framework for every business.  Your field may require additional permitting or specialty licenses not covered here.  For best results, call the city or state, numbers above.  

Happy Working,
Jenny


Some Helpful Details

For the State Business License

Some things you'll be asked:  
        • what bank you'll be using
        • your SSN and your partner's SSN
        • description of your business:  1- 2 sentences
        • trade name(s)
        • which cities you'll be doing business in (you need a license for each one)

For the City Business License

Some things you'll be asked:  
        • the UBI - it is your Unified Business Identifier, you'll get this with your state license
        • estimated income
        • note:  your legal business name will be the same as your name, to get a different name, you need to by a DBA, doing business as, also called a trade name.  They are $5 each.

Photo Credit: Design for a Flying Machine by Leonardo da Vinci - http://www.drawingsofleonardo.org. Licensed under Public Domain via Wikimedia Commons 

How to Set Up Your Business in Seattle - as an LLC 

  A Bigger Splash , David Hockney • Credit below.

A Bigger Splash, David Hockney • Credit below.

Setting up an LLC business doesn't take much time!  ….That is, if you know what to do, what you need, and the right order of steps.  Here's where I've got you covered.  

(Not sure if you want an LLC?  Read Sole Proprietor or LLC:  Which is Best for Me?)

Below is the quick and dirty list.  Detailed notes are at the bottom of the post.  

If you know your business name(s), the whole process takes about one hour.

Go ahead, take the plunge!


Pro Tip:  Get a journal to record all your log-ins, passwords, IDs, and various notes as you go through the process.  Use in the future for all research and calls related to taxes and licensing. Read more in Make Your Life Easier! - Simple Tips For Keeping Track Of License And Tax Stuff

 

1)  Register your LLC.

Through:  the Washington Secretary of State
Click here to go directly to registration.
Cost:  $200
Time:  10 minutes

2) Pause + wait for your UBI

You'll need your UBI to go on to the next steps.  (Unified Business Identifier.) It's a lot like your social security number, in that it's a tax ID number assigned to you ... and banks and other organizations will ask for it to identify you.  It'll be provided along with your LLC documents.  Most often, it's in a 9 digit format.  Sometimes it'll be in a 16 digit format, where there are 0s and 1s at the end, noting your "business ID" and "location ID".

3) Apply for your state business license.

Through:  Washington State Business Licensing Service (BLS)
Click here to go to the Apply for a State License page on the BLS.WA.gov site
Cost:  $19 plus $5 for each DBA
Time:  15 - 20 minutes

4) Apply for your city business license.

Through:  City of Seattle Business
Click here to go directly to registration
Cost:  $110 for standard, $55 if you plan to make under $20K.
Time:  15 - 20 minutes

That's it!  You're in business.  …but you're not quite done.  To be legal, you need to ensure that you have all of the special permits and licenses for your line of business. 

5) Optional ~ Apply for an EIN

EIN stands for Employer Identification Number.  It's a tax ID number assigned to businesses by the IRS.  If you are a sole prop or a single-member LLC, you are allowed to use your SSN for business purposes.  Having said that, banks and online forms will often required you to have an EIN.  The issue is that the number formatting is different.  With your social security number, it looks like 000-00-0000.  With an EIN, it looks like 00-0000000. 

Good news!  It's easy, free, and only takes 10 minutes.  Here's the link:  Get EIN on IRS.gov.  Or, go to IRS.gov and search for EIN.  Heads up, this web service is only available during the daytime.

6) Do your due diligence.

At the state level, check the List of Licenses 
This is a list by trade, with links to relevant licensing agencies.  
Here's the list of Endorsements required by some businesses.
Or, call the BLS:  1-800-451-7985

And, at the city level, check the Regulatory Endorsements page.
Or, call the City of Seattle:  206.684.2489

Another nice tool is the WA Business Hub.  It's created to walk anyone through the setting up a business.  There's a TON on there.

7) Celebrate!

* * Please note:  The intent of this post is to get you started!  And, to provide you with the required framework for every business.  Your field may require additional permitting or specialty licenses not covered here.  For best results, call the city or state.  

Happy Working,
Jenny Girl Friday


Some Helpful Details

With the LLC Registration

Some things you'll be asked:  
        • the legal name of your company
        • 2 alternate names
        • start date - day of filing, or a specific date
                              (Tip:  pick one that's easy to remember or has meaning for you.)
        • perpetual or specific time period

Mostly, you will have to put your name and address in a million times.  Because, as a single-member LLC, you are the member, the manager, the agent, and registrar.  You fill all the roles.

Even though you will be a limited liability company, LLCs are handled along with the corporations.  

For the State Business License

Some things you'll be asked:  
        • the UBI - you get this when your LLC goes through - it is your Unified Business Identifier
        • what bank you'll be using
        • your SSN and your partner's SSN
        • description of your business:  1- 2 sentences
        • trade name(s)
        • which cities you'll be doing business in (you need a license for each one)

For the City Business License

Some things you'll be asked:  
        • the UBI - you get this when your LLC goes through - it is your Unified Business Identifier
        • estimated income

Sole Proprietor or LLC: Which is best for me?

When you work for yourself, you fill two roles in one.  The employee and the employer.  In order to do this, you have to create a business entity that essentially hires you.  It feels a little like make-believe play – All I want to do is my work! – but it is necessary.  The two most common options are sole proprietor and limited liability company, or LLC.

It is the first decision that you need to make, because it determines your legal status and name options.  And, you’ll be asked about it right away when registering your license.

Sole Proprietor

Advantages:  simplest and cheapest
Legal Name:  must be your name
Disadvantage:  liability – if someone sues your business, they are suing you

In this case, you and the business are considered one in the same.  There’s no real structure to set up or maintain.  You simply are required to have licenses and pay taxes.  It is free.  There are no additional obligations, and no special benefits.  Except that the paperwork is the most streamlined. 

There is a risk, though.  If someone sues your business, they are suing you too.  Meaning, if they win and you owe them money, it comes out of your personal accounts.  In a worst case scenario, you’d have to sell your house or drain accounts to pay them.

You can do business under a different name, called your trade name, or DBA, Doing Business As.  For example, Jane Doe’s legal business name would be Jane Doe.  She could do business as, Polka Dot Consulting.  She just has to register this name, so her business activity is traceable to her legal name.  These only cost $5 each.  When you apply for your license, you can choose 1 or more. 

LLC

Advantages:  protection from lawsuits, looks official
Legal Name:  must include a version of LLC*
Disadvantage:  it costs some money each year 

In this case, the business is a company that is separate from you.  It offers a layer of protection.  If someone sues your company and wins, then they can take company assets (not your personal ones).  In my case, this includes a small business savings account, my computer, printer, and lots of great books.  The idea is that your home and personal monies are protected.  Having said that, it is possible to get around that protection – depending on the case and the lawyer.  If you want to know more on the subject, I suggest meeting with a small business lawyer to share more about your specific situation. 

You must apply with the Secretary of State to be granted this entity.  It costs about $200.  And, you must renew each year on the anniversary month, for about $80. 

The LLC also looks serious and cool.  For people that don’t know, it helps you to look official.  This can be a boon for certain types of business.  You can also use DBAs.  (But they may not include variations of LLC.)

Concerning the IRS – Good news!

A cool thing is that you don’t have to do anything different for the IRS!  That is, if you are a single-member LLC.  Because you are still a one-person business, and there’s no dividing of profit, the IRS lumps you in with Sole Proprietors.  In fact, they refer to you as a “disregarded entity”.  You are not regarded!  You are ignored.  This is great because it keeps your paperwork simple. 


In the end, both serve different purposes.  Often - people who are tight on cash, or starting before they're totally ready, or intimidated by the LLC – choose sole proprietor.  For others who have the money, and/or are really committed to their vision, tend to go for the LLC!  You even get a certificate with borders and a golden seal to frame.

If you have questions, please, get in touch  Click here to read a post on how to get licensed in Seattle.

Happy Working,
Jenny Girl Friday

Girl Friday LLC
DBAs:  
Jenny Girl Friday
Jenny MacLeod
Girl Friday
girlFriday

*Limited Liability Company, Limited Liability Co., LLC, or L.L.C.