Washington registration and tax info

• Washington Department of Revenue - business license
  • You'll register with this agency first—the other agency accounts will be created once your business license information is shared by this agency.
• Washington State Department of Labor and Industries (L&I) - worker’s compensation
• Washington Employment Security Department (ESD) - unemployment tax and Paid Family and Medical Leave

There are two options for registration, each with its own timeline for getting you the necessary tax account information you'll need before you can run payroll.

• Online registration—you'll receive tax account information 10 days after you complete the registration [recommended].
• By mail—you'll receive tax account information 6 weeks after sending in your business license application. 

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
     • Step one: Create a business structure with the Office of the Secretary of State—click on the box that says "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 retain 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 and Employment Administration Fund rate

The letter and packet will be sent to you 10 days after registering online, or within 6 weeks if registering by mail.

Enter the tax account information you received in Gusto

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

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
   • 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.

If you need to update a tax account number after one has already been entered: contact us from the Help section of your account—there may be tax implications if taxes have already been paid or filed to an incorrect account number.

Workers' Compensation insurance protects and covers your business against injuries and illness that could occur as a direct result of the work done while your employees are on the job.

Washington requires that employers get their coverage through a state-operated fund—as such, Gusto will pay this insurance premium on your behalf to the state.

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 Operational 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 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).

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 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 Job & 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.

Examples of employees that may be exempt from Workers Comp 

• Sole proprietors, partners and some LLCs without employees (owners only)

  • Coverage is optional (link: https://lni.wa.gov/insurance/insurance-requirements/do-i-need-a-workers-comp-account/llc-members) 

• Self-insured employers (note: private carrier coverage is not permitted)

• Employees based in Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, or Wyoming

  • Washington has reciprocal agreements 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, please visit this website or call (360) 902-4817.

Where to find you unemployment tax rate

When you filed the business license application, you should have received a letter from your new Workers' Comp account manager, and a packet of information which 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-specific unemployment rate—we just suggest you add the "New employer SUI tax rate" specific to Washington in the meantime.

• You can find the new employer rates for each state in this article, along with instructions on how to update the rate once you receive your company-specific rate.

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 at any time: follow these steps. 

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.

• Washington PFML is a program that offers partial wage replacement while on leave to recover from: an illness or injury, bonding with a new child, certain military connected events, or taking care of a sick or injured family member.
  • Reminder: Paid Family and Medical Leave is separate from the WA Cares Fund that goes into effect July 1, 2023.

This is done online through your SAW (Secure Access Washington) portal by adding Paid Leave to your online services. 

• If you do not have a SAW account, you can follow this video tutorial to get one set up.

Once you've established and logged into your SAW account, follow the instructions below to add your account to the Paid Family and Medical Leave’s 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 and find "Paid Family and Medical Leave" listed under your services, and click to access it and create your Paid Family and Medical Leave 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 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 additional information is needed, the agency will contact you using the contact information 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.

• If you're looking to help partially or fully pay the employee-specific premiums, 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: you must update your Gusto account each year by March 31 if you're subject to the employer premium. 

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.

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, please 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.

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 Job & 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: you must update your Gusto account each year by March 31if you're subject to the employer premium. 

Enter the tax account information in Gusto

Let Gusto know whether you're subject to the employer portion of the tax:

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.

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, please 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).

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 of 0.58% per $100. At this time, there is no wage base limit for the premiums. 

Businesses must collect the employee-premiums for employees whose work is localized in WA and are required to report employees’ wages and hours. You’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.

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