A Washington LLC pays no state personal income tax. Washington instead applies a Business & Occupation (B&O) gross-receipts tax on business revenue. Federally, the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership by default, and an S-corp election on Form 2553 reduces self-employment tax once net income clears about $40,000-$60,000. This page covers federal, state, and non-resident tax for a Washington LLC in 2026.
By default the IRS taxes a Washington LLC as a pass-through. A single-member LLC is a disregarded entity reported on Schedule C of the owner's Form 1040, and a multi-member LLC is a partnership filing Form 1065 with a Schedule K-1 to each member. Neither default carries a federal entity-level income tax; profit passes to the owners and is taxed on their personal returns. The LLC keeps this pass-through status until it elects otherwise. An S-corporation or C-corporation election changes the treatment, but the default pass-through is what applies the day the LLC forms.
No. Washington has no state personal income tax on LLC owners. It instead applies a Business & Occupation (B&O) gross-receipts tax on business revenue, assessed on gross income rather than net profit. The absence of a state income tax is a genuine draw, but the B&O tax means the LLC pays on revenue even in a low-margin year. There is no deduction for costs or payroll against the B&O base. A Washington LLC files the B&O return through the Department of Revenue, separate from the Secretary of State annual report and separate from any federal return.
The Business & Occupation tax is Washington's gross-receipts tax, charged on the LLC's gross revenue with no deduction for expenses. Rates depend on the business activity classification, with retailing, wholesaling, and service categories each carrying a distinct rate. A small-business credit reduces or eliminates the B&O bill below a revenue threshold, so many low-revenue LLCs owe little. Washington cities including Seattle add their own local B&O tax on top of the state rate. The LLC registers for a Washington state business license, then files B&O returns on the schedule the Department of Revenue assigns, monthly, quarterly, or annually based on revenue.
An S-corp election becomes worthwhile once net business income clears about $40,000-$60,000 per year. Below that, the payroll and compliance cost of running an S-corp outweighs the self-employment tax it saves. Electing S-corp status with IRS Form 2553 lets the owner pay a reasonable salary and take the remaining profit as a distribution, saving the full 15.3% self-employment tax on the non-salary portion. The trade-off is payroll setup, quarterly filings, and a separate corporate return. The election affects federal tax only; Washington's B&O tax and the absence of state income tax are unchanged either way.
Default LLC owners pay 15.3% self-employment tax on net business income: 12.4% Social Security up to the $168,600 wage base plus 2.9% Medicare with no cap. High earners add a 0.9% Medicare surtax above the IRS threshold. This self-employment tax funds Social Security and Medicare and applies on top of ordinary federal income tax. An S-corp election reduces it by splitting income into salary and distribution, but the salary must be reasonable for the work performed. Washington charges no state income tax on this income, so the federal self-employment and income tax is the owner's main personal tax exposure.
It depends on Effectively Connected Income (ECI). A non-resident-owned Washington LLC with no US ECI owes no US federal income tax on foreign-earned profit, but a foreign-owned single-member LLC files Form 5472 with a pro-forma Form 1120 each year. With US ECI, the profit is subject to US income tax and the owner needs an ITIN to file a personal return. A multi-member LLC files Form 1065 and issues K-1s regardless. Anonymousllc.co partners with US tax preparers who handle non-resident filings, and offers ITIN service at $299 for owners who need one for a personal return.
Form 5472 is an IRS information return required for any US disregarded entity with 25% or more foreign ownership. A non-resident-owned single-member Washington LLC files it annually alongside a pro-forma Form 1120. The form reports transactions between the LLC and its foreign owner, and the penalty for not filing is $25,000, so it matters even when no income tax is due. It is an information return, not a tax bill, but the IRS enforces it strictly for foreign-owned entities. Anonymousllc.co's partnered preparers file Form 5472 for non-resident clients so the LLC stays compliant.
A multi-member Washington LLC is a partnership by default. It files Form 1065 and issues a Schedule K-1 to each member, who reports their share of profit on their personal Form 1040. There is no federal entity-level income tax on the LLC itself; the profit passes through to the members. Each member pays income tax and, for actively involved members, self-employment tax on their share. The partnership can still elect S-corp or C-corp treatment when that lowers total tax. Washington's B&O tax applies to the LLC's revenue on top of the members' federal pass-through obligations.
Under the March 21, 2025 FinCEN interim final rule, domestic reporting companies are exempt from Beneficial Ownership Information reporting. A Washington LLC formed in the US is a domestic reporting company and is currently exempt. Foreign reporting companies, meaning LLCs formed outside the US that register to do business here, remain obligated and file at $150 per report. Most Washington LLCs are domestic and file nothing under the current rule. Anonymousllc.co monitors FinCEN rule changes and files BOI reports for clients who fall under the foreign reporting company definition.
Yes. Cities including Seattle, Tacoma, and Bellevue levy their own local Business & Occupation tax on top of the state B&O tax, each with its own rates, thresholds, and registration. A Washington LLC can owe both the state and a city B&O tax. The local B&O applies to revenue attributed to business done within that city, so an LLC selling across several Washington cities may register and file in more than one. Each city sets its own small-business threshold below which no tax is due, and its rates differ from the state schedule. A Washington LLC registers for the state business license first, then adds the city endorsements it needs. Anonymousllc.co's partnered preparers map which city filings apply based on where the LLC actually does business, so the local B&O is not missed at year end.
No. An LLC that does business in Washington owes Washington B&O tax on its Washington revenue regardless of where it was formed. Forming in Wyoming secures owner privacy, not an exemption from Washington's gross-receipts tax. A Wyoming anonymous LLC that foreign-qualifies into Washington registers for the state business license and files B&O returns on its Washington-source revenue exactly like a domestic Washington LLC. The Wyoming structure keeps members and managers off the public record; it does not move the tax situs of income actually earned in Washington. An LLC with no Washington nexus and no Washington-source revenue owes no Washington B&O tax, which is a question of where business is done rather than where the LLC is registered. The privacy and the tax questions are separate: Wyoming answers the first, and Washington nexus answers the second.
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