The short answer
- Seattle has its own business license tax certificate and its own B&O tax on gross receipts
- To close the account you send written notice of the closing or sale, with the effective date
- Letting the renewal lapse does not close the account
- Final returns are required, and returns must be filed even when no tax is due
- The buyer gets its own Seattle license; yours doesn't transfer
In this guide
Seattle's Separate Account
Businesses in Seattle need a Seattle business license tax certificate, managed by the city's License and Tax Administration. Most also owe Seattle's business and occupation tax, which is based on gross receipts from activity in the city.
This is separate from the state B&O tax you pay to the Department of Revenue. Many owners pay both.
Closing Takes Written Notice
The city's instructions are direct: to close the account, you send written notice of the closing or sale of the business. Include the effective date.
Not paying the next renewal doesn't close it. An account left open keeps expecting returns, and missing returns turn into notices and penalties later.
Treat the city account like any other loose end on the closing checklist. Close it on purpose.
Final Returns, Even at Zero
Expect to file final Seattle tax returns covering activity through the sale date. Seattle requires returns to be filed even when no tax is due, so a quiet final period still needs a return.
Returns and account closures are handled through FileLocal, the online portal Seattle shares with several other Washington cities.
Asset Sale or Stock Sale
In an asset sale, your company stops doing business in Seattle and closes its account. The buyer applies for its own Seattle business license and starts its own returns.
In a stock sale, the company keeps its account. The new owners update the account information instead of closing it.
Why Buyers and Lenders Care
A buyer's attorney will ask whether your Seattle account is current. Unpaid city tax is a liability, and lenders don't like surprises.
Review your city filings when you review your state ones. If you've had Seattle activity but no city returns, fix that before you go to market.
A Short Checklist
- Log in to FileLocal and confirm every Seattle return is filed and paid.
- Check whether your license covers more than one location.
- When you sign the purchase agreement, add the city notice to the closing timeline.
- After closing, send written notice with the effective date and file final returns.
- Keep a copy of the notice and the final returns with your closing records.
What the City Looks At
Seattle's tax is based on gross receipts from business activity in the city. If you also do business outside Seattle, your returns apportion receipts between the city and elsewhere.
A buyer's accountant may compare your Seattle receipts to your state returns and your federal returns. Gaps raise questions, so reconcile all three before listing.
If You Are Reopening Later
Some sellers stay on as consultants or start a new company after the sale. The city treats a reopened account as a reinstatement only if it has been closed for at least 12 months, so plan the timing if that applies to you.
A new company with a new owner applies for its own license from the start.
Records to Keep
Keep your city returns, payment confirmations, the closing notice and any letters from the city with your closing binder. If a question comes up years later, those records answer it quickly.
Those records also help your CPA with the final state and federal returns for the year of the sale.
Your CPA can tell you which of them to keep and for how long.
Other Cities Too
Several Puget Sound cities, including Bellevue, have their own business licenses and B&O taxes. If you operate in more than one, each account needs closing.
The state side is covered in our guide to the Department of Revenue tax clearance.
When you're ready to talk about a sale, use the price check form or call (206) 555-0171.