Who is exempt from paying Washington ESD unemployment taxes - confused about my status

Do you know what the payroll threshold is? We're pretty small but I want to make sure we're following the rules.

I think it's based on your total wages paid in a quarter, but I'm not 100% sure of the exact numbers. You should check with Washington ESD directly.

That $1,000 threshold sounds like we'd definitely qualify. What about the religious organization exemption - does that apply to any faith-based business?

No, it's specifically for churches and qualified religious organizations, not just businesses owned by religious people. The exemption is pretty narrow.

How much does something like that cost? I'm trying to keep expenses down for the business.

It was worth it for me to get actual answers instead of guessing. Way better than sitting on hold for hours or trying to navigate their website.

Never heard of that before but might be useful. The ESD phone lines are always busy when I try to call.

Tell me about it. I've been paying ESD taxes for 3 years and I still don't understand half the paperwork they send.

Right?? And if you make a mistake they act like you did it on purpose. So stressful.

That's good to know. My brother has a small farm and he's always wondering about this stuff.

Yeah, a lot of small farm owners think they're automatically exempt but that's not usually the case if they have employees.

You're supposed to register within a certain timeframe of meeting the requirements. I think it's like 30 days but don't quote me on that.

Washington ESD requires registration within 10 days of becoming liable for unemployment taxes. If you're already past that, you should register as soon as possible to avoid penalties.

Generally no, unemployment taxes are only on employees (W-2), not independent contractors. But Washington has strict rules about who can actually be classified as an independent contractor.

Yeah I've heard Washington is pretty tough on that. Better to err on the side of treating them as employees if you're not sure.

Nonprofits can elect to reimburse ESD for benefits paid to their former employees instead of paying regular unemployment taxes, but they're not automatically exempt. Some 501(c)(3) organizations have this option.

Oh interesting, I didn't know about the reimbursement option. Is that usually better than paying the regular taxes?

It depends on your turnover rate and benefit claims. If you rarely have people file for unemployment, reimbursement might be cheaper. If you have high turnover, regular taxes might be better.

Services performed by your child under age 18 are generally exempt from unemployment taxes. But once they turn 18, they're treated like regular employees.

Good to know, thanks! One of mine just turned 18 so I guess I need to start including their wages now.

RIGHT?? Everything with ESD is unnecessarily complex. Even their website is confusing to navigate.

That's exactly why I ended up using that Claimyr service I mentioned earlier. Sometimes you just need to talk to an actual person who can explain your specific situation instead of trying to decode all the rules yourself.

Seasonal businesses are generally subject to the same rules. If you meet the wage or employment thresholds during your operating season, you'd be liable for unemployment taxes.

Makes sense I guess. Just seems weird to pay into a system when my employees know they're only working temporarily.

There are a few other narrow exemptions like certain student employees, some railroad workers covered under federal programs, and specific government positions. But these are pretty specialized situations.

Probably doesn't apply to me then, but good to know these exist.

Same here! At least now I know we need to get registered instead of just hoping we're somehow exempt.

Yeah better to be compliant from the start than deal with penalties later.

You need to register within 10 days of becoming liable, which is usually when you first meet the wage or employment thresholds. ESD will then send you information about when your first payments are due.

Got it, so it's not like you get a full year grace period or anything. Thanks for all the info!

My friend got audited a few years ago. As long as you're keeping good records and paying what you owe, it's not that scary. They mainly want to see your payroll records and make sure you're classifying workers correctly.

That's somewhat reassuring. I've been keeping detailed records just in case.

Yes, Washington ESD uses an experience rating system where your tax rate depends on your industry and your history of former employees filing for benefits. New employers start at a standard rate and then it adjusts based on experience.

Interesting, so if you rarely have people file for unemployment, your rate goes down over time?

Generally yes, though there are minimum rates and other factors involved. Industries with typically higher turnover tend to have higher base rates.

Same! Better to figure this out now than get surprised by penalties later. Thanks everyone for sharing your knowledge.

Glad this thread helped multiple people! These tax requirements can be really confusing when you're trying to run a business.

Good to know it's legit. Might be worth it to get proper guidance instead of guessing about compliance.

Exactly. The peace of mind was worth it for me, especially dealing with tax obligations where mistakes can be expensive.

Agreed! Wish I had found something like this when I was starting out. Would have saved me a lot of confusion.

Definitely! Really appreciate everyone taking the time to explain all this. Makes me feel much more confident about getting my business properly set up with ESD.