Washington registration and tax info

• Washington Department of Revenue - business license
  • You'll register with this agency first. Other agency accounts will be created once this agency passes your business license information to them.
• Washington State Department of Labor and Industries (L&I) - workers' compensation
• Washington Employment Security Department (ESD) - unemployment tax and Paid Family and Medical Leave (PFML)

There are two options for registration—online (recommended), and by mail. In both cases, you'll get your account information after the agency finishes processing your application. This can take up to 12 weeks based on agency volume.

Register your company in the state

1. The steps required to register as a business differ depending on your business structure:
   • Sole proprietorships and general partnerships
     • File a Business License Application with the Business Licensing Service.
   • Corporations, limited partnerships, LLCs and LLPs
     • Create a business structure with the Office of the Secretary of State. Click "Corporations and Charities Filing System (CCFS)" to register.
     • Once the business structure is complete, file a Business License Application with the Business Licensing Service.
   • Businesses that are already licensed, but that are hiring employees for the first time
     • Refile a business license application with the Business Licensing Service.
2. The Department of Revenue will process your application and:
   • Notify WA Labor & Industry (L&I) to open a workers' compensation account.
   • Notify the Employment Security Department (ESD) to open an unemployment insurance account.
3. You'll receive a letter from your new Workers' Comp account manager, and a packet of information which you'll need to keep that includes:
   • Your Unified Business Identification (UBI)
   • Your ES (Employment Security) Reference Number
   • Your Workers' Comp Account ID
   • Your Participant Activation Code (PAC) for WA L&I 
     • Reminder: The Department of Revenue no longer issues PAC codes. The PAC code Gusto requires will be issued by Washington L&I.
   • Your State Unemployment Insurance (SUI) and Employment Administration Fund rate (EAF)

The letter and packet will be sent to you once the agency finishes processing your application. This can take up to 12 weeks based on agency volume.

As a reminder, you'll also need to enter Standard Occupational Classification (SOC) codes for your employees in Washington.

Enter the tax account information you received in Gusto

Once you add a valid Washington work address in Gusto for one or more employees, add your tax account details:

1. Click the Taxes & compliance section and select Tax setup.
2. Scroll to the "Washington Tax Setup" headline and select Manage taxes.
3. Enter your:
   • ES Reference number
   • Unified Business ID
   • Workers' Comp Account ID
     • Once you've entered your Washington L&I account number in Gusto, we'll create a third-party authorization (TPA) form you'll need to sign.
       • We cannot file your tax returns to WA L&I without the needed third-party authorization (TPA). If you're coming to Gusto from another payroll provider, you'll need to transfer TPA to Gusto. To do so:
         • Head to the Company section and select Documents.
         • E-sign the applicable WA authorization form.
   • Participation activation code
   • SUI tax rate—do not include the EAF rate when entering your rate in Gusto.
     • Include all other lines (such as social cost) from the SUI rate notice.
   • You'll also need to enter Standard Occupational Classification (SOC) codes for your employees in Washington.

If you edit a tax account number after payments or filings have already been made, there may be tax implications. Learn how to pull reports in Gusto that can help you correct any historical tax issues related to tax account number updates.

Workers' Compensation insurance protects your business. It covers injuries and illness that could occur due to the work your employees do while on the job.

Washington requires employers to get coverage through a state fund. So, Gusto will pay this insurance premium to the state for you.

Once you've filed your business license (see instructions in the dropdown above), you can find the workers' comp rates assigned to you online.

• Heads up: Risk class codes are different than Standard Occupational Classification (SOC) codes. SOC codes are also required for Washington employees—check out this article for more information.

Where to find your company's workers' comp rates

1. To get your company's risk class code rates, start by going to the Washington State Department of Labor & Industries website.
2. Use the dropdown to search by your company name, Workers' Comp account number, or WA UBI number and enter the information.
3. Choose your company name from the list of results.
4. Click Workers' Comp Rates.
5. Find your agency-assigned:
   • Risk Classification, and;
   • Composite Rate (Hourly Rate), and;
   • Employee Deduction (Employee Withholding)

Heads up: Gusto does not support class codes that use square footage as part of the tax calculation (e.g., the drywall industry).

Enter risk class codes and rate information in Gusto

If an employee has multiple risk class codes, you'll need to assign them a job for each code. Then, you'll edit the code for each job.

1. Go to the People section and select Team members.
2. Click an employee’s name.
3. From the Pay tab, find the “Compensation” section.
4. Find “Risk Class Code” and click edit next to that section.
5. Enter (or edit) the risk class code by clicking the drop-down arrow next to the code.
   • Use the search to find the correct code and apply it.
   • If you're using the WA Workers' Compensation Rate Notice: Put the Total Hourly Rate (combined Hourly Employer Contribution + Hourly Employee Withholding) as the Hourly Rate. Enter the Hourly Employee Withholding as the Employee Withholding.
6. Click Save.

Examples of employees that may be exempt from Workers Comp 

• Sole proprietors, partners and some LLCs without employees (owners only)
  • Coverage is optional 
• Self-insured employers 
  • Private carrier coverage is not permitted
• Employees based in Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, or Wyoming
• Washington has deals with these states about when and how they accept their workers’ compensation coverage
• Some corporate officers are exempt from mandatory coverage.
• Some for-hire vehicle/drivers.
• Some maritime workers.
• Some contractors.
• Most volunteers.
• Some trucking contractors.

For more information about required coverage and exemptions, visit this website or call (360) 902-4817.

Where to find your unemployment tax rate

When you filed the business license application, you should have received a letter from your new Workers' Comp account manager. You also should have gotten a packet of information. It will include your unemployment rate (based on your industry).

If you're unsure about your rate, call the agency at (855) 829-9243, option 3.

Running payroll in Gusto before you've been issued a company-specific unemployment rate

If you need to run payroll and do not yet have your company's unemployment rate, just add the "New employer SUI tax rate" for Washington for now. Update the rate once you get it.

Enter the tax account information in Gusto

Once a valid Washington work address has been added in Gusto for one or more employee(s), add your tax account information:

1. Click the Taxes & compliance section and select Tax setup.
2. Scroll to the "Washington Tax Setup" headline and select Manage taxes.
3. Enter your agency-assigned unemployment rate any any other rate(s) applicable.
   • If you need to update your rate, learn how here. 

As a reminder, you'll also need to enter Standard Occupational Classification (SOC) codes for your employees in Washington.

Rules update to expand worker protections for 2026: Washington is changing its Paid Family and Medical Leave (PFML) rules starting Jan 1, 2026. House Bill 1213 changes how employer size is counted—using the average number of employees over four quarters. It also adds job protection rules for smaller businesses. In 2026, companies with 25 or more employees must follow the new job protection rules. By 2028, it will apply to companies with 8 or more employees.

Register for Paid Family and Medical Leave

After you've received your UBI account number from the state, you'll need to register for Paid Family and Medical Leave. To do this, add Paid Leave to your SAW (Secure Access Washington) portal.

• If you do not have a SAW account, follow this video tutorial to get one set up.
• Washington PFML offers partial wage replacement while on leave. This leave is for recovering from an illness or injury, bonding with a new child, certain military events, or caring for a sick or injured family member.
  
  • Reminder: Paid Family and Medical Leave is separate from the WA Cares Fund.

Once you've created a SAW account, add your account to the Paid Family and Medical Leave system:

1. Click on the Add a New Service button.
2. Select I would like to browse a list of services.
3. On the list of organizations, select Employment Security Department.
4. Locate Paid Family and Medical Leave and add it to your services—click the Apply link to add it.
5. On the confirmation screen that lets you know the service has been added to your list, click OK.
6. Go back to the SAW homepage. Find "Paid Family and Medical Leave" under your services. Click to access it and create your account.
7. Select Continue to be brought to the Paid Family and Medical Leave portal.
   • You will be prompted to create an account.
8. Find “Employer Accounts,” then click Create an Account.
9. Enter your 9-digit UBI (Unified Business Number) number.
   • If you're not sure of this number, you can reach out to the Department of Revenue. You'll likely receive an error that the UBI is not found. If that's the case, you can press, Create Employer.
10. This will bring you to a form where you'll need to fill out the required information about your business.
    • After you enter your address and click Next, you'll need to upload supporting documentation. This can be either:
      • The Master Business Application (from the Department of Revenue) or;
      • The business's Articles of Incorporation (from the Washington Secretary of State)
11. Washington’s compliance team will review your request and will add the UBI number to their system.
    • If more information is needed, the agency will contact you. They will use the contact info you provided on the application.

Employee premiums

Gusto withholds and pays the employee-premiums for this tax. Employers have the option to cover some or all of their employees’ PFML deductions—learn how below.

Employer premiums

Employers with less than 50 employees

These companies are exempt from paying the employer premium, however, the employee premium is still required.

• Employers have the option to cover some, or all, of their employees’ PFML deductions—learn how below.

These companies can choose to pay the employer premiums to be eligible for WA ESD’s small business grants, but this is not supported in Gusto. For more information on this, head to the WA PFML website.

Employers with over 50 employees

Employers with 50 or more employees are required to pay the employer premium. Gusto can pay the employer-premium on your behalf, so long as you've let us know you're subject to the tax in your Gusto account. If you don’t take any action, we won’t pay employer contributions on your behalf.

• Important: If you're subject to the employer premium, you must update your Gusto account each year by March 31.

How Is business size determined?

Washington’s Paid Leave determines your business size annually on September 30. They do so by averaging the number of employees on your Q3 and Q4 reports from two years ago, and your Q1 and Q2 reports from last year.

• For example: Your 2025 business size will be the average of employee counts from your Q3 and Q4 2023 reports, as well as Q1 and Q2 of your 2024 reports. 

If your business size changes, the agency will mail the business a letter in early October to let you know.

Let Gusto know whether you're subject, or not subject, to PFML

1. Click the Taxes & compliance section and select Tax setup.
2. Scroll to "Washington Tax Setup", and click Manage Taxes.
3. Click the blue edit pen and let us know you’re required to pay the employer portion of WA Paid Family and Medical Leave.
   • If the agency calculated that you have 50 or more employees:
     • You'll be responsible for paying the full premium rate, including the employer share of premiums, on wages paid Jan 1–Dec 31 of the new calendar year.
   • If the agency calculated that you have fewer than 50 employees:
     • Beginning Jan 1 of the new calendar year, you will not be responsible for paying the employer share of premiums.
       • You may still choose to contribute the full premium rate to the program by opting in on an annual basis—the enrollment period is open until March 1.

Cover a percentage of your employees' PFML deductions

First, a few reminders:

• These settings will be applied for all employees in the state.
• The settings go into effect the quarter following the one in which edits were made. 
  • Example: If you make an edit in July (during Q3), the company will start covering employee-deductions starting October 1 (beginning of Q4).
    • In the meantime, you can issue non-taxable reimbursements at the end of the quarter to repay all or a part of the amount(s) deducted from employees. 
• These settings only apply for PFML deductions in WA.

Set the percentage of employee-deductions for PFML you'd like to cover:

1. Click the Taxes & compliance section and select Tax setup.
2. Under "Washington Tax Setup", click Manage Taxes.
3. Under "State Tax Settings", next to "PFML employee portion", click the blue edit.
4. Enter the percentage you'd like to cover.
5. Click Save. 

Premium calculations and other PFML resources

The total premium amount due each tax year can vary (up to the Social Security wage base) and is made up of both employee and company contributions. For updated rate information, see the Premium Calculator.

Use the resource(s) below to find additional information about WA PFML:

• WA PFML agency site
• Employer-specific info
• Reporting PFML outside of Gusto

Unified Business Identifier (UBI) 

Existing businesses can search their UBI account number on the Department of Revenue website. 

1. Click "Look up a business" under the "I want to..." section.
2. Enter your company name and click Search.

UBI numbers typically start with a 6.

Employment Security Department (ESD) account numbers

If you've run payroll in Washington in the past, you can find your ESD account numbers on the Quarterly Tax and Wage Detail Reports (form 5208 A).

You can also find both your ESD and UBI numbers on your "annual tax rate" notice from the Employment Security Department.

If you don't know your account numbers, call the ESD at (360) 890-3500.

You can find your unemployment account number and rate by:

• Checking the notice you receive from the Washington Employment Security Department each year or;
• Calling the agency at (855) 829-9243.

Do not include the EAF rate when entering your rate in Gusto. Include all other lines (such as social cost) from the SUI rate notice.

As a reminder, you'll also need to enter Standard Occupational Classification (SOC) codes for your employees in Washington.

WA L&I account number

You can find your account number by logging into your WA L&I account. 

• This agency is separate from WA Employment Security. 

Once you've entered your Washington L&I account number in Gusto, we'll generate a third-party authorization (TPA) form you'll need to sign.

Required: Sign the TPA form in Gusto

Without the required third party authorization (TPA), we're unable to file your tax returns to WA L&I. This means, if you're coming to Gusto from another payroll provider, you'll need to transfer third party authorization (TPA) to Gusto. To do so:

1. Head to the Company section and select Documents.
2. E-sign the applicable WA authorization form.

Participation Activation Code (PAC)

Employers are assigned a Participation Activation Code (PAC) for their Workers’ Comp Insurance—you can find the PAC on your Workers’ Comp "new account letter" and "annual rate notice."

The PAC number is a 3 to 8-digit number. If you don't know your number, contact the Washington L&I agency at (360) 902-4817.

Workers' comp rates

1. To get your company's assigned risk class code rates, start by heading to the Washington State Department of Labor & Industries website. 
2. Use the dropdown to search by your company name, Workers' Comp account number, or WA UBI number and enter the information.
3. Choose your company name from the list of results.
4. Click Workers' Comp Rates.
5. Find your agency-assigned Risk Classification, Composite Rate (Hourly Rate) and Employee Deduction (Employee Withholding).

Heads up: Gusto does not support class codes that use square footage as part of the tax calculation (ie. the dry wall industry).

If an employee has multiple risk class codes, you'll need to assign them a job for each role/risk class code, and then edit the risk class code for each role using the instructions below. 

1. Go to the People section and select Team members.
2. Click an employee’s name.
3. From the Pay tab, scroll to the “Compensation” headline.
4. Find “Risk Class Code” and click edit next to that section.
5. Enter (or edit) the risk class code by clicking the drop-down arrow next to the code.
   • Use the search to find the correct code and apply it.
   • If you're viewing your rates from the WA Workers' Compensation Rate Notice: enter the Total Hourly Rate (combined Hourly Employer Contribution + Hourly Employee Withholding) as the Hourly Rate, and the Hourly Employee Withholding as the Employee Withholding.
6. Click Save.

Employee premiums

Gusto withholds and pays the employee-premiums for this tax.

Employer premiums

Employers with less than 50 employees

These companies are exempt from paying the employer premium, however, the employee premium is still required.

If you're looking to help partially or fully pay the employee-specific premiums, Gusto does not currently support this. You can issue non-taxable reimbursements at the end of quarter to repay all or a part of the amount(s) deducted from employees. 

Employers with over 50 employees

Employers with 50 or more employees are required to pay the employer premium—Gusto can pay the employer-premium on your behalf, so long as you've let us know you're subject to the tax in your Gusto account. If you don’t take any action, we won’t pay employer contributions on your behalf.

• Important: If you're subject to the employer premium, you must update your Gusto account each year by March 31. 

How Is business size determined?

Washington’s Paid Leave determines your business size annually on September 30—they do so by averaging the number of employees on your Q3 and Q4 reports from two years prior, and Q1 and Q2 reports of the prior year.

• For example: Your 2025 business size will be the average of employee counts from your Q3 and Q4 2023 reports, as well as Q1 and Q2 of your 2024 reports. 

If your business size changes, the agency will mail the business a letter in early October to let you know.

Let Gusto know whether you're subject, or not subject, to PFML

1. Click the Taxes & compliance section and select Tax setup.
2. Scroll to "Washington Tax Setup", and click Manage Taxes.
3. Click the blue edit pen and let us know you’re required to pay the employer portion of WA Paid Family and Medical Leave.
   • If the agency calculated that you have 50 or more employees:
     • You'll be responsible for paying the full premium rate, including the employer share of premiums, on wages paid Jan 1–Dec 31 of the new calendar year.
   • If the agency calculated that you have fewer than 50 employees:
     • Beginning Jan 1 of the new calendar year, you will not be responsible for paying the employer share of premiums.
       • You may still choose to contribute the full premium rate to the program by opting in on an annual basis—the enrollment period is open until March 1.

Cover a percentage of your employees' PFML deductions

First, a few reminders:

• These settings will be applied for all employees in the state.
• The settings go into effect the quarter following the one in which edits were made. 
  • Example: If you make an edit in July (during Q3), the company will start covering employee-deductions starting October 1 (beginning of Q4).
    • In the meantime, you can issue non-taxable reimbursements at the end of the quarter to repay all or a part of the amount(s) deducted from employees. 
• These settings only apply for PFML deductions in WA.

Set the percentage of employee-deductions for PFML you'd like to cover:

1. Click the Taxes & compliance section and select Tax setup.
2. Under "Washington Tax Setup", click Manage Taxes.
3. Under "State Tax Settings", next to "PFML employee portion", click the blue edit.
4. Enter the percentage you'd like to cover.
5. Click Save. 

Premium calculations and other PFML resources

The total premium amount due each tax year can vary (up to the Social Security wage base) and is made up of both employee and company contributions. For updated rate information, see the Premium Calculator.

Use the resource(s) below to find additional information about WA PFML:

• WA PFML agency site
• Employer-specific info
• Reporting PFML outside of Gusto

Once a valid Washington address has been added in Gusto for one or more employee(s), you can add your tax account information:

1. Click the Taxes & compliance section and select Tax setup.
2. Scroll to the "Washington Tax Setup" headline and select Manage taxes.
3. Enter the applicable account number(s) and rate(s).
4. You'll also need to enter Standard Occupational Classification (SOC) codes for your employees in Washington.

If you’re already registered for Paid Family Medical Leave (PFML) in Washington and have a “UBI” number, you don’t need to register again. The Washington Employment Security Department (ESD) is working on updating their PFML platform to include WA CARES. 

Requirements

Employers do not contribute, employees pay 100% of the premiums, through a payroll deduction. At this time, there is no wage base limit for the premiums. 

Gusto will collect the employee-premiums for employees whose work is localized in WA and report employees’ wages and hours. We'll typically collect WA CARES premiums and file reports for the same employees who pay PFML premiums.

Eligible employees can apply for an exemption, and if approved, they must present the ESD’s exemption approval letter to all current (and future) employers. 

• If an employee provides you with an exemption letter, set up the exemption in Gusto.
  
  • Employees with approved exemptions are permanently ineligible to participate in the program.
• If your company already supplies long-term care insurance for your employees, you still cannot apply for an exemption on behalf of employees.
  • Employees get to choose if they want an exemption from WA Cares coverage, or if they want to use WA Cares to supplement the benefits you’re already offering.

All full-time and part-time employees are eligible to participate in the program, unless they’ve received an approved exemption letter.

In addition to living out of state, a few other conditions make somebody working in WA eligible for exemption from WA CARES.

WA CARES is long-term care, which consists of help with daily activities like bathing, eating, dressing, taking medications, and assistance in the bathroom. Long-term care is not the same as medical care and isn’t covered by health insurance or PFML.

• FAQs
• Employer information
• Toolkit for employers

Beginning Jan 1, 2021 through Dec 31, 2040, employers doing business in the city of Seattle may be subject to a payroll expense tax—learn more below. 

Gusto does not support this tax but we’ll continue to monitor the impact to our customers and reassess the decision in the years to come.

Here’s what you need to know

• This is an employer-­paid tax on the “payroll expense” of the business, meaning the compensation paid to employees in Seattle.  
  • Learn more below about how compensation totals are determined.
  • The payroll expense tax is a tax that businesses have to pay, not the employees. This means the employer pays the tax, and it isn't taken out of employees' paychecks. The law specifically states employers cannot withhold the tax from their employees.
• To see if you're required to pay this tax, go to Seattle's City Finance website.

How do I determine if the company meets the annual threshold?

There's an exemption if the prior year's compensation paid to Seattle employees was under an annual dollar amount. Learn more in the dropdown below about what should be included in compensation calculations.  

• For example: If you want to know if a company is subject to the tax in 2025, you’ll need to pull and calculate the 2024 compensation paid to Seattle employees to determine if the company has met the payroll expense threshold. 

If you’re subject to the tax (based on your prior year's compensation data), the next step is to use the current year's compensation paid in Seattle to determine the payroll expense tax due for the new calendar year.

How do I calculate the businesses total compensation paid to Seattle employees?

For this tax, compensation has the same meaning as it does for the WA Family and Medical Leave program. 

The total payroll expense for employees in Seattle paid at or above the annual compensation limit, starting with the first dollar paid, must be included in the amount subject to the payroll expense tax.

Compensation calculations include:

• The standard gross compensation paid to the Seattle employee
• All payments for personal services
• Commissions and bonuses
• The cash value of all earnings paid in any medium other than cash
• Employee contributions to deferred compensation plans (e.g., 401(k), 403(b), or other deferred compensation plans) in which a portion of an employee's salary or wages are set aside to be paid at a later date

Compensation does not include:

• Tips
• Supplemental benefit payments made by an employer to an employee in addition to any paid family or medical leave benefits received by the employee
• Employee exercised stock options (incentive stock options (ISOs) or non-qualified stock options (NQSOs))
• Payments provided to cover a past or future cost incurred by the employee as a result of the employee's expected job functions
• Employer contributions into retirement or disability plans
• Payments to an owner of a pass-through entity that are not earned for services rendered or work performed (i.e., return of capital, investment income, or other passive activities).

You can build a custom report in Gusto using the instructions found in this article to help with finding annual compensation totals.

What rates are used for the Seattle Payroll Expense tax?

View the current tax rate in this chart. 

Payroll expense tax due dates

• Apr 30
• For the quarter ending March 31
• Jul 31
• For the quarter ending June 30
• Oct 31
• For the quarter ending Sep 30
• Jan 31
• For the quarter ending Dec 31

How to file and pay the Seattle Payroll Expense tax 

1. Register for a Seattle business license tax certificate if you haven’t already done so.
   • Anyone doing business in Seattle must have the above certificate—additional information about the Seattle business license tax can be found here. 
2. If you want to register and file manually: Payroll Expense Tax forms will be available to download from the website. 
• Manual forms can be completed and mailed to the address provided on the back of the form. Returns are not deemed filed until both tax filing and payment are received.
3. Sign in to the city of Seattle’s online tax portal FileLocal.
   • Make sure you have your “customer number” that was assigned to the business when you registered—you can find this on the business license tax certificate.
4. Use your “customer number” to file and pay online.
   • If you’re filing manually: include the customer number as well as legal name and address on the filed form. 

If you have questions about this process, contact the agency directly at (877) 693-4435 or by email at FileLocal@avenuinsights.com.

Fling returns as a preparer on behalf of another business?

Create a Preparer Account in FileLocal to file returns on behalf of your client—the client will need to grant you permission to file their returns in FileLocal.

Updates for the Payroll Expense tax

Check out the Seattle Department of Finance and Administrative Services Payroll Expense tax updates.

Seattle residents voted to approve Proposition 1A, adding a 5% payroll expense tax on annual compensation over $1 million paid to an individual employee.

Gusto does not support this tax right now, but we’ll keep an eye on how it affects our customers and may review our decision in the future.

Additional Payroll Expense Tax summary and details

• This tax applies only to Seattle businesses and excludes independent contractors.
• The tax, effective Jan 1, 2025, will fund housing development and maintenance in the city. 
• This tax is separate from the existing Seattle payroll expense tax enacted in 2021.

How to pay and file the Additional Payroll Expense Tax (outside of Gusto)

As a reminder, Gusto does not support this tax right now, but we’ll keep an eye on how it affects our customers and may review our decision in the future.

If you have any employees with compensation over $1 million, follow the steps in the "Seattle Payroll Expense Tax" section above in this article to learn how to file and pay the tax.