Hi, @Duey !
While I can share what other Washington state business owners typically do, please note that this is peer advice, and you should consult with a tax professional for guidance specific to your business situation.
General considerations for Washington state businesses:
- State Tax Considerations:
- Washington has no personal income tax
- Businesses are subject to B&O (Business & Occupation) tax
- Sales tax varies by location (ranging roughly from 7% to 10.6%)
- B&O tax rates vary by business classification
Common savings approaches from community members:
Many Washington business owners report setting aside:
- 15-30% of each transaction for taxes and expenses
- Some break this down as:
- 8-10.6% for sales tax (depending on your location)
- 5-10% for B&O tax (rate varies by business type)
- Additional buffer for federal taxes and expenses
Tips for using Square's automatic savings feature:
-
Consider setting up multiple savings destinations:
- One specifically for sales tax
- Another for B&O tax
- A third for federal taxes/expenses
-
Review and adjust your savings percentage quarterly to ensure you're setting aside enough based on your actual revenue and tax obligations.
Important Notes:
- Your optimal savings percentage may differ based on:
- Your business type
- Location within Washington
- Business structure (LLC, Sole Proprietorship, etc.)
- Deductions and expenses
- Overall revenue
Recommended Next Steps:
- Consult with a tax professional to determine your specific tax obligations
- Review your past year's tax payments to calculate your effective tax rate
- Add a buffer percentage for security
- Set up automatic savings based on these calculations
I hope this helps!
