Washington payroll setup for your first hire

Washington does not take state income tax from paychecks

DOR’s hiring-employees page says Washington does not have a personal income tax. There is no state employee withholding certificate. There is no state paycheck-withholding account to open. Washington does not publish a withholding portal. A federal W-4 still sits with the IRS. A payroll login is not a state withholding account, because Washington does not assign one.

One Business License Application. ESD is not L&I.

Washington still has two first-hire accounts. ESD collects state unemployment tax. That tax is often called SUTA, state unemployment tax, or SUI, state unemployment insurance. L&I sells workplace injury insurance. Washington calls that workers’ compensation, or industrial insurance. You start both on one file. You still file them on two systems.

DOR’s hiring-employees page is that start file. File or update the Business License Application with the Business Licensing Service (BLS). File no sooner than 90 days before you plan to hire. Mark that you will hire employees. DOR forwards that hire mark to ESD and L&I. Each agency then sends its own account information and quarterly-report directions. A DOR login is not an ESD account number. A DOR login is not an L&I policy. You need a separate account with ESD for each location that has employees. You need a separate account with L&I for each location that has employees.

DOR also assigns a Unified Business Identifier (UBI). Hold that number. Later Paid Family and Medical Leave (PFML) setup uses it. PFML is a separate program. It is not the ESD unemployment account. It is not the L&I industrial-insurance policy.

Register unemployment through the hire path. File quarterly reports in the Employer Account Management System, even with no hours.

ESD’s Employer Tax Handbook says you must register with Employment Security if you have employees or plan to hire employees in Washington. When you mark the hire on the business license, BLS sends ESD a copy. ESD reviews the facts. If you need to pay unemployment tax, ESD sends a confirmation letter and an initial tax-rate notice. RCW 50.12.070 requires each employer to register and obtain an employment security account number. File when the hire path shows you are an employer. There is no 15-day California clock on that page.

Operating without that registration brings a fine. ESD’s quarterly-report page and the handbook both say the fine is $1,000 or twice the unpaid taxes for that quarter, whichever is greater. RCW 50.12.072 is the statute. Use the rate on the ESD notice, not a number from a software page.

ESD’s tax-rate page sets the 2026 taxable wage base at $78,200. Taxes are due only on wages up to that base. For 2026, a new employer pays 115 percent of the average rate for its industry. Federal law sets a 1 percent floor. ESD stops treating you as a new employer after about 2½ to 3 years. Confirm both figures on your notice and on the live ESD page. WAC 192-320-025 is the new-employer rate rule.

After ESD issues the account, file in the Employer Account Management System (EAMS). Sign in through SecureAccess Washington (SAW). ESD’s EAMS setup page is that door. You need to file a tax and wage report each calendar quarter while the account is active, even if you have no employees and no payroll. Those reports are due April 30, July 31, October 31, and January 31. That is the last day of the following month. Name, Social Security number, gross pay, hours, and the Standard Occupational Classification (SOC) or job title go on that report. A quarterly wage report is not the new-hire report.

Household work uses another test. ESD says you do not report domestic-service workers until you pay $1,000 or more in a quarter. If you reach that amount in any quarter, you report wages for the entire year. This scorecard is the regular-business path.

ESD also says every employer files two quarterly reports. One is the unemployment tax and wage report. The other is a combined report for Paid Leave and WA Cares. PFML still sits apart from the unemployment account. Register PFML on SAW after you have a UBI. Confirm the live rule on the Paid Family and Medical Leave site.

New hire is a 20-day DSHS report. A quarterly wage report does not satisfy it.

The new-hire report is a list of who you just hired. It is not a box on the ESD quarterly report. RCW 26.23.040 requires the report within 20 days of hire. A rehired person is someone who was gone for at least 60 consecutive days. Report name, address, Social Security number, date of birth, and date of hire, plus the shop’s name, address, and federal EIN.

File with DSHS, not ESD. ESD’s new-hire page sends that job to DSHS. DSHS’s new-hire page restates the 20-day clock and the 60-day rehire rule. Employers who send reports electronically send two monthly files, not less than 12 nor more than 16 days apart, when they have people to report. A quarterly EAMS wage report does not satisfy that clock.

Workplace injury insurance is the L&I state fund. Ordinary shops do not buy a private policy.

This is a first-hire policy for ordinary shops. It is not Texas optional coverage. It is not Florida’s four-employee wait. Washington calls this workers’ compensation, or industrial insurance.

L&I’s insurance-requirements page is the agency rule. Washington does not allow private workers’ compensation coverage. You must buy coverage from L&I or be a certified self-insured employer. Ordinary first-hire shops do not self-insure. RCW 51.12.010 is the coverage policy. RCW 51.14.010 is the duty: insure with the state fund, or qualify as a self-insurer.

L&I’s how-to-get-an-account page uses the same DOR hire path. Apply for a state business license, or update one and mark that you will hire employees within 90 days. L&I says it receives the application within about one week. An account manager sets up the policy, then sends a rate notice, a certificate of coverage, and workplace posters. Premiums are reported quarterly by hours and risk class. DOR says L&I usually contacts you within one week after DOR processes the application. A payroll login is not a policy.

How Gusto and Patriot describe Washington

Confirm the live unemployment number and rate on EAMS. Confirm workplace injury insurance on the L&I rate notice. Washington has no state paycheck-withholding number to confirm.

Gusto’s Washington help article says Middesk (Gusto’s business-verification company) may register state income-tax withholding and state unemployment insurance (SUI). Washington has no state paycheck withholding. The same article’s Washington steps tell you to file the Business License Application yourself. It says DOR then notifies L&I and ESD. It says Washington requires coverage through a state fund, and that Gusto will pay that premium to the state. It also tells you to add Paid Leave on SAW after you have a UBI. Confirm the live numbers on ESD and L&I. Confirm the rate on the ESD notice. Read Gusto’s Washington article. See Gusto on the directory.

Patriot’s tax table says Full Service files Washington Unemployment Insurance (SUI or SUTA) on the Quarterly Tax and Wage Report. It also lists the L&I Quarterly Report of Hours & Premiums and Paid Family and Medical Leave. Patriot’s registration article tells you to file a Business License Application with DOR. It does not claim Patriot opens those accounts. It says ESD assigns a new-employer SUTA rate by industry. Use the rate on your ESD notice, not a number from a software page. The same article says Washington is a monopolistic state and that ordinary shops buy workplace injury insurance from the state-operated fund. Read Patriot’s article and Patriot’s registration article. See Patriot on the directory.

What still sits on the employer

• File or update the Business License Application and mark that you will hire employees within 90 days. Household shops use the domestic path.
• Hold the ESD account number and the UBI. Do not substitute a federal EIN for the ESD number.
• Enter the tax rate from the ESD notice, not a marketing figure. Confirm the 2026 wage base on the live ESD page.
• File the unemployment tax and wage report in EAMS by April 30, July 31, October 31, and January 31, even with no hours. Include the SOC or job title.
• Do not open a state paycheck-withholding account. Washington does not take state income tax from paychecks.
• File the Washington new-hire report with DSHS within 20 days of hire or rehire after 60 days. A quarterly EAMS report does not satisfy that clock.
• Get the L&I industrial-insurance account from the same hire path. Ordinary shops buy that policy from L&I. Payroll software does not issue that policy.
• Treat PFML as a related employer duty on SAW. Do not treat it as the ESD unemployment account or the L&I policy.
• Do not copy another state’s clock onto Washington. Washington can share a start file. Washington does not finish on one portal. Washington does not use California’s $100-quarter test. Do not copy Texas optional workplace injury insurance onto Washington. Do not copy Florida’s four-employee wait onto Washington.

Related guide: Hiring your first employee lists the federal forms that still apply when Washington has no paycheck withholding.

Related guide: Can I do my own payroll? covers the federal withholding and deposits that still apply when Washington has no paycheck withholding.

Related guide: Independent contractor vs employee is the federal label check. No Washington paycheck withholding does not make a worker a contractor.

Related guide: Best payroll software for small business is a checklist for grading a product against the hire path that starts ESD and L&I.

Related guide: How to pay employees covers the federal check. Washington’s quarterly report of gross pay and hours is not a pay stub.

Related guide: Employer payroll taxes percentage is the federal share on top of wages. Washington’s 2026 unemployment wage base is $78,200, and Washington takes no state income tax from paychecks.

Related guide: How to pay tips to employees covers card tips and the federal tip report. Washington still takes no state income tax from that paycheck.

Related guide: How to run payroll is the federal payday. Washington still takes no state income tax from that check, and the quarterly report still wants hours.

Also forming a company in Washington? Process Score compares registered agents there.