In addition to the federal payroll taxes, being a business owner in WA State comes with some additional state-specific responsibilities. This page shares my knowledge about the WA State taxes, and summarizes the many conversations I’ve had explaining them to clients.
- Worker’s Comp: A mandatory insurance program generally paid by the employer, with the option of withholding a portion of the premium from employees’ paychecks. The premiums are calculated by adding up the number of hours worked in specific risk classes, and paid to the Department of Labor & Industries. Some risk classes carry a higher rate than others, largely dependent upon the likelihood (and potential severity) of an injury happening while that type of work is being performed.
- State Unemployment Insurance: An mandatory insurance paid by the employer. It is calculated by the total amount of gross wages paid, and paid to the Employment Security Department. (ESD) Employers’ rates can range from 0.27%-8.15%, and are impacted by things like delinquent tax filings and employees filing for unemployment benefits.
- Paid Family and Medical Leave: PFML is a state-managed fund for paid leave and partial wage replacement in the event that something prevents an employee from being able to work. PFML is paid mostly by the employees by funds that are withheld from their paychecks and remitted once a quarter. In the case of a company that has fewer than 50 employees, the employer is exempt from having to pay their percentage, meaning that this tax becomes exclusively employee-paid.
- WA Long Term Cares Act: WA Cares is state-managed long-term care insurance program paid for by funds that were withheld from employees’ paychecks. Its purpose is to cover employees who require long-term care.
A Note about Corporate Owners
Generally speaking, corporate owners aren’t required to pay for Workers’ Compensation or State Unemployment Insurance coverage for their own time / wages unless they specifically request coverage from the relevant agency. However, corporate owners who are receiving W-2 wages are required to pay for Paid Family Medical Leave and WA Cares coverage on their own wages, with rare exceptions.
Accrual
These taxes follow a quarterly schedule, and are accrued on the dates on which the employees are paid, not when the hours were worked. For example, if you have employees who are paid on the first day of the third quarter (July 1) for hours they worked on the last day of the second quarter, (June 30) that payroll would count towards your third quarter liabilities.
The standard quarterly filing due dates are listed below.
Due April 30th
1st Quarter Filings Due
Includes Worker’s Comp, State Unemployment Insurance, PFML and WA Cares liabilities accrued in Jan, Feb, and Mar.
Due July 31st
2nd Quarter Filings Due
Includes Worker’s Comp, State Unemployment Insurance, PFML and WA Cares liabilities accrued in Apr, May, and Jun.
Due October 31st
3rd Quarter Filings Due
Includes Worker’s Comp, State Unemployment Insurance, PFML and WA Cares liabilities accrued in Jul, Aug, and Sep.
Due January 31st
4th Quarter
Includes Worker’s Comp, State Unemployment Insurance, PFML and WA Cares liabilities accrued in Oct, Nov, and Dec.
State Reporting Payroll Service
If this sounds overwhelming, don’t worry. It can be, but it doesn’t have to be. Inkblot Bookkeeping and Payroll can handle your Washington State quarterly payroll filings with accuracy and timeliness. Additionally, as part of the State Reporting payroll service, you will be provided with an ongoing estimate of what these taxes are going to cost, rather than being hit with “sticker shock” when it’s time to pay.
If you’re a business owner in Washington State and want help with your payroll, please contact Inkblot today. A 15-minute conversation can save you a bunch of time and unnecessary stress when it comes to dealing with these state agencies.