Who is exempt from paying Washington ESD unemployment taxes - confused about employer requirements

Thanks! I'm not in any of those categories so I probably need to register. Do you know what the current tax rate is?

The rate varies based on your experience rating, but new employers typically start around 2.7% on the first $62,500 of each employee's wages for 2025.

That's correct - sole proprietors and partners in partnerships can't collect unemployment on themselves, so they don't pay unemployment taxes on their own earnings. But if they have employees, they still need to pay unemployment taxes for those workers.

That makes sense. I'll be hiring employees eventually so I'll need to set this up properly from the start.

That's really helpful! I was dreading having to call them. How long did it take to get connected?

Way faster than calling directly. Got through to someone who could actually answer my questions about employer requirements and tax rates.

Never heard of Claimyr before but if it works for employer questions too that could be useful. I've been trying to reach ESD about my tax account for weeks.

This is exactly what I needed! Since I'm starting a regular LLC, looks like I'll need to register and pay the taxes.

Don't forget about the small employer exemption too - if you have less than a certain number of employees or payroll amount, there might be different requirements.

Good point! In Washington, you're generally required to register once you have at least one employee or if your quarterly payroll exceeds $1,000.

I understand the frustration, but the unemployment system protects your employees if they lose their job. It's actually beneficial to have that safety net in place.

yeah i guess you're right, just wish the rules were clearer upfront

There are some exceptions for family members. Spouses, children under 21, and parents working for their child's business may be exempt from unemployment taxes. But the rules are specific and have conditions.

interesting, my brother works for my business so i should look into that

Another reason I should probably just call and get clarification on my specific situation.

Good advice. I'd rather be safe than sorry with something like this.

Exactly what happened to a friend of mine - thought they were exempt as a small business but ended up owing back taxes plus penalties. Cost them way more than just paying from the start.

Independent contractors (1099 workers) generally don't count toward unemployment requirements since they're not employees. But make sure they're properly classified as contractors - misclassification can create big problems.

Thanks, that's what I thought but wanted to confirm. I'm careful about the contractor classification rules.

That's another thing I need to research - the difference between employees and contractors for tax purposes.

I'm trying to handle this myself to save money starting out, but maybe I should consult an accountant just to make sure I set things up correctly.

It might be worth it for the initial setup, then you can handle the ongoing requirements yourself once you understand them.

I'm definitely going to check that out. Sounds like it could save me a lot of headaches.

How much does it cost to use their service?

I didn't worry too much about the cost since my time is valuable and I needed answers. Check their website at claimyr.com for details.

That seems to be the consensus - better to just comply from the start rather than risk issues later.

exactly, and the rates aren't that bad compared to other business taxes anyway

Yes, if you meet the requirements for coverage, you're subject to unemployment taxes even if you're seasonal. However, your employees might be eligible for benefits during your off-season depending on their work history.

Makes sense I guess. Just adds to the complexity of running a seasonal operation.

That's exactly why I'm asking now before I hire anyone. Want to have everything in place properly.

Smart move. It took me weeks to get everything sorted out after the fact.

Definitely try it. I was skeptical at first but it really works. Much better than sitting on hold for hours.

At this point I'm willing to try anything. Thanks for the recommendation.

Good tip! I'll look for that on their website. Every bit of information helps.

It's under the employer section. Pretty straightforward questionnaire that walks you through the requirements.

Good point. I'm building all the employer taxes into my financial projections now.

smart approach, also don't forget about workers comp and other employer requirements while you're at it

Yes, there can be significant penalties and interest charges for late registration and unpaid taxes. Washington ESD takes compliance seriously and will assess back taxes plus penalties.

Yikes, definitely don't want to deal with that. Better to register early and ask questions.

Another reason to get this sorted out properly from the beginning.

Glad it helped you too! That seems to be the main takeaway - when in doubt, just register and comply.

Exactly. The peace of mind is worth it.

If you have trouble getting through, remember that Claimyr option. Saved me so much time and frustration with ESD calls.

will definitely keep that in mind if the regular phone line doesn't work out

Good decision. It's always better to be proactive with tax compliance. Best of luck with your new business!

You'll be glad you handled this properly from the start. Makes everything smoother as you grow.

And remember, if you need to reach ESD for any follow-up questions, Claimyr can help you get through faster than calling directly.

That's a really important point that I hadn't considered! I was assuming exemptions were automatic if you met the criteria. Good to know you actually have to apply and get approval first. This definitely reinforces my decision to just register as a regular business rather than trying to figure out if I might qualify for some exemption I'm not even sure about.

This is such crucial information! I never would have thought that exemptions require formal applications - I assumed they were just automatic based on your business type. Thanks for sharing this, it could save people from getting into compliance issues later. Do you know roughly how long the exemption application process takes? I'm definitely going the regular registration route now rather than risk any delays or complications.