B&O Tax
Washington's Business and Occupation (B&O) tax is a tax on gross receipts, not profit. Retailers pay 0.471% of gross Washington sales, with no deduction for product costs, fees or anything else; you owe it even in a money-losing year. It's separate from sales tax, so a marketplace facilitator collecting Washington sales tax on your orders does nothing about your B&O bill. Several other states run similar gross receipts taxes, like Ohio's CAT and Texas's franchise tax.
B&O catches ecommerce sellers precisely because facilitator laws taught everyone to stop thinking about Washington. Your FBA inventory in Amazon's Washington warehouses creates nexus, Amazon remits the sales tax, and everything feels handled, but the B&O obligation on your gross Washington receipts remains yours. A seller with $500,000 of annual Washington sales owes about $2,355 in retailing B&O. Small enough to ignore, until several years of non-filing turn into an assessment with penalties and interest, and Washington does find marketplace sellers.
The mitigation is knowing your numbers: Washington offers a small business credit that phases out as receipts grow, and sellers under the filing thresholds may owe nothing, but you only know by running the math on real state-level sales data, which settlement-based books produce as a byproduct. The full picture, thresholds and all, is in our Washington sales tax guide, and multi-state exposure review is part of ecommerce tax services.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
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