Seattle small-business taxes: a practical filing and bookkeeping guide

Start with a tax map, not a pile of receipts

A Seattle shop can have several reporting relationships at once. A federal return, a Washington excise return and a Seattle business tax return answer different questions. Put each account on its own line in a tax map: agency, account identifier, responsible person, reporting period, payment method and where the last filed return is stored. This simple list makes a conversation with a bookkeeper much more useful than asking whether the business has already “done its taxes.”

Your federal obligations depend on the business structure and circumstances. The IRS distinguishes income, estimated, self-employment, employment and excise taxes; not every business has every category. Confirm the entity and any elections with the person preparing the return. A business name or an LLC registration alone is not a sufficient description of the federal filing assignment.

Confirm which jurisdictions the business is connected to before assuming a return is required. A location in Seattle, work performed elsewhere, employees, deliveries and additional sales channels can raise different questions. This guide is a record-preparation framework, not a determination of nexus or registration for a particular business. If the facts cross city or state boundaries, bring those facts to the review rather than choosing obligations from the business mailing address alone.

• IRS: Business taxes
• City of Seattle: Business licenses

Keep Washington B&O and Seattle B&O on separate lines

Washington B&O measures business receipts rather than simply the profit shown in management accounts. Seattle also has its own B&O system. Do not use a city threshold to decide whether a state account needs attention. Likewise, paying state tax does not establish that a city return has been filed.

The city’s guidance says its Seattle B&O threshold increased to $2 million effective January 1, 2026. A business below that threshold may owe no city B&O, but the city still requires reporting of annual gross revenue even when no city B&O is due. License requirements, state taxes and federal taxes remain separate questions. Use the current city guidance for the relevant year rather than an old search snippet.

• Washington DOR: Frequently asked questions about B&O and gross business income
• City of Seattle: Business taxes

Use a monthly close that produces explainable numbers

A useful close has an owner, a deadline and a visible list of unresolved items. Start by comparing each bank and card account with its statement. Then investigate deposits that do not match invoices or processor reports. Record the explanation while the transaction is still familiar. A transfer between your own accounts should be identifiable without the preparer having to guess from two nearly identical amounts.

A practical sequence is to reconcile cash first, review customer balances next, then examine purchases, payroll and financing. Save the version of the reports that you reviewed. If something changes afterward, record the correction and its reason. This is a workflow recommendation, not a requirement to buy a particular accounting package.

At the end of the close, write three short notes: what changed, what is still unclear, and what the owner needs to decide. For example, “October delivery deposits include a September settlement” is far more useful than an unexplained adjustment labelled miscellaneous. Consistency matters more than having an elaborate chart with categories nobody uses.

• Confirm the opening and closing balances for every business bank and card account.
• Match large or unusual receipts to an invoice, agreement or settlement report.
• Identify personal spending, owner funding and inter-account transfers for review.
• Keep unresolved transactions in a named review list instead of forcing an answer.

Separate sales evidence from the cash arriving in the bank

A deposited amount can combine several sales, exclude fees, arrive days after the sale or include money that is not sales revenue. Preserve the reports that explain that bridge. For a contractor, that may mean invoices and progress payments. For a cafe, it may mean point-of-sale totals and processor settlements. For a photographer, it may mean booking agreements, deposits and final invoices.

The IRS calls for supporting documents behind the entries in the books. A bank statement is valuable evidence of payment, but it may not explain what was purchased or why it related to the business. Keep invoices or itemized receipts alongside the payment evidence. Give each file a usable name, such as date, supplier and invoice number, so a later reviewer can find the original without opening every attachment.

• IRS: What kind of records should I keep?

Build the calendar from the actual accounts

Washington DOR assigns filing frequency to an excise account. Check that assignment and the current due-date page; do not assume that an annual federal return means an annual state excise return. Add a second reminder before the deadline for collecting missing records. A reminder on the filing day is too late if an employee, vendor or prior preparer has the necessary information.

A calendar entry should distinguish preparing, approving, submitting and paying. Store the acceptance or confirmation with the return. A finished spreadsheet is not proof that an agency received a filing, and a bank debit is not a substitute for keeping the return that explains it. Where an account is legitimately closed or has approved non-reporting status, retain the agency evidence instead of silently deleting it from the calendar.

• Washington DOR: Filing frequencies and due dates

Prepare one year-end handoff that can be checked

Assemble a year-end index before sending files. Include the legal business name, tax identifiers through a secure channel, entity documents, prior returns, reconciled financial reports and an explanation of material changes. Flag a new owner, business sale, additional state activity or a change in payroll arrangements. The preparer should be able to see what is complete and what still needs a decision.

Include a list of equipment purchases, financing agreements and year-end customer and supplier balances for review. Do not assume every cash payment has the same tax treatment. Keep a separate questions page for uncertain deductions, mixed personal use or transactions you cannot explain. This gives the preparer a clear starting point without treating a draft ledger as a final tax position.

• A report index and the period covered by each file.
• Reconciled profit and loss and balance sheet, with an unresolved-items list.
• Supporting sales, purchase, payroll and financing records as applicable.
• Copies of prior filings and agency notices, with submission confirmations.

Choose help by scope and handoff, not the headline alone

Ask what the engagement includes: which entity and return, which tax year, who supplies the books, how corrections are handled and whether state or city work is included. Ask separately about payroll, owner returns, catch-up bookkeeping and notices. A useful proposal makes those boundaries readable before you transfer sensitive records.

Selro is the cheapest way to get your business taxes done: US$399 a year covers everything tax for the year, including the federal business return, Washington excise and Seattle business tax returns and the owner's return when the business income needs it. Bookkeeping is US$20 a month, and catch-up bookkeeping gets one flat quote. Bring the records above and our team takes it from there.