Short answer: Almost certainly yes, if you do business in Washington. The Business & Occupation tax is assessed on your gross receipts — what you take in, before expenses — so you can owe it in a year you made no profit at all. That is the part that surprises people.
Washington has no state income tax, which is why the state taxes business activity this way instead. There is no deduction for the cost of doing business built into the B&O calculation the way there is on a federal return. A contractor who brought in $300,000 and spent $290,000 on materials and labor still reports the $300,000.
Your rate depends on your classification — retailing, wholesaling, service, manufacturing and others are taxed differently, and a business doing more than one kind of work reports under more than one classification. Getting the classification wrong is one of the more common and more correctable errors we find in new client files.
How often you file depends on your volume. The Department of Revenue assigns you a frequency when you register: roughly, annual filers are the smallest, quarterly sit in the middle, and monthly filers are the largest. Annual returns are due April 15, quarterly returns at the end of the month following the quarter, and monthly returns on the 25th of the following month.
There is also an “active non-reporting” status for very small businesses. For calendar years beginning on or after January 1, 2023, a business with gross proceeds under $125,000 a year may qualify, provided it also meets the other conditions — notably that it is not collecting retail sales tax. Qualifying does not mean you have no obligations; it means you are not required to file the return while you stay under the line.
Spokane itself does not levy a separate city B&O tax the way Seattle and Tacoma do, so for most businesses here the state return is the filing that matters. If you also do work in a city that does impose one, that is a separate return.
Rates, thresholds and classifications change with legislative sessions. Treat this as an orientation, not a filing instruction, and confirm your specific situation — that is exactly what a consult is for.
Related: What payroll taxes does a Washington employer have to file? · What records does a Washington small business need to keep? · Tax Planning & Preparation