What payroll tax accounts should new businesses register for?

Payroll Tax Accounts for New Businesses in Washington

When starting a business in Washington, it is essential to register for the correct payroll tax accounts to ensure compliance and smooth operations. Below are the key payroll-related accounts new businesses should set up:

• Washington State Department of Revenue (DOR) Account: Register to collect and remit the business and occupation (B&O) tax and other applicable state taxes. This registration is often the first step in establishing your tax accounts.
• Washington Employment Security Department (ESD) Account: Required for unemployment insurance tax reporting. This account tracks contributions for unemployment benefits that employees may claim.
• Washington Department of Labor & Industries (L&I) Account: Register for workers’ compensation insurance and payroll reporting. This account covers workplace injury insurance and is mandatory for most employers.
• Federal Employer Identification Number (EIN): Obtain from the IRS for federal payroll tax reporting, including Social Security, Medicare, and federal unemployment taxes (FICA and FUTA).

Additional Operational Considerations

As of 2026, businesses should also implement proper payroll systems to handle withholding, remittances, and reporting for these accounts. Automation tools can simplify compliance and reduce errors.

Keep accurate payroll records to meet state and federal reporting requirements and support audits or reviews. Employee classification (exempt vs. non-exempt, contractor vs. employee) impacts payroll tax obligations and must be managed carefully.