Doing Business in the City of Shelton
City of Shelton's Business License Requirements and Business and Occupation (B&O Tax)
1. All businesses "doing business" in the city, whether located inside or outside the city, must obtain a City of Shelton Business License.
2. All businesses are subject to B&O tax unless exempted by Shelton Municipal Code.
3. Businesses with annual gross receipts of $20,000 or less are not subject to this tax. However, a tax report must be filed, regardless of the amount due.
View B&O Tax information
To apply for a business license, please follow the following steps:
1. Apply for a City of Shelton Business License through Washington State's Business Licensing Service.
2. Complete the appropriate forms for the business type and return them to the City of Shelton, 525 West Cota Street, Shelton, WA 98584.
All Businesses: Change of Ownership, Use, or Tenant Improvement Application
Home Occupation: Business License Home Occupation Permit and Checklist
Contractors must register with Washington State Labor & Industries.
Current B&O Tax Rates
B&O tax is calculated on gross receipts at a rate of 0.1% for all classifications.
1. The tax return form must be completed and returned with payment of taxes by the last day of the month following the reporting period.
2. Taxpayers are required to keep records for the most recent five-year period. All books, records, invoices, receipts, etc. shall be open for examination at reasonable times by the City or designated agent.
3. When submitting your tax return:
- Use the pre-addressed envelope provided
- Make check or money order (don't send cash) payable to "City of Shelton"
- Advise the City of changes in address or ownership
- Penalties and interest are due if tax returns are not postmarked by the due date
|Time||% of Tax Due||Minimum|
|1-30 days late||5% of the tax due||$5 minimum|
|31-60 days late||15% of the tax due||$5 minimum|
|61+ days late||25% of the tax due||$5 minimum|
Businesses must file monthly unless the City approves a different reporting schedule. Tax reports must be filed even if there was no business activity during the taxable period. To avoid penalties, return the B&O Tax Report and write “no activity” for the gross amount.
If your business is no longer operating within the City limits, notify the City immediately. Your Business and Occupation Tax Account will be closed once we have received a final tax report.
Business Address Changes
Mailing address changes should be indicated on your B&O Tax Report. Businesses that change locations within the City limits will need to apply for a new business license.
About the City's B&O Tax
B&O taxes support general governmental services. B&O tax generates about $450,000 per year. Every person, firm, association, or corporation doing business in the City is subject to the B&O tax based on their gross receipts.
This means that a general contractor pays tax calculated on their gross, and each of his subcontractors pays tax based on their individual gross. Some call B&O the "pyramid tax" for this reason. Some exemptions are provided from the city's B&O tax, see below. All businesses report based on their gross receipts.
B&O Tax Classifications
For B&O tax purposes, businesses are divided into six classifications. Businesses conducting multiple activities will report in more than one tax classification.
- Extracting: Taking of natural products, such as logging, mining, quarrying, etc. B&O tax is calculated on the value of products extracted, determined by selling price.
- Manufacturing/Construction: The business of producing articles from raw or prepared materials, giving these matters new forms or qualities, such as fabricating, processing, refining, mixing, packing, canning, etc. or building, repairing, improving any street, road, highway, etc. which is used for foot or vehicular traffic. Constructing and repairing new or existing buildings or other structures upon real property is also included. The B&O tax is calculated on the value of products manufactured, as determined by selling price or gross receipts.
- Wholesaling: Sellers of products to persons other than consumers are considered to be wholesalers. The B&O tax is calculated on the wholesale selling price.
- Retail Service: Businesses that sell specific services to consumers. Taxable retail services include those generally performed on property, such as repair, and also on personal or professional services, such as doctors, attorneys, or accountants. The B&O tax is calculated on gross receipts.
- Printing/Publishing: Newspapers, magazines and periodicals are taxable under this classification, as well as persons who both print and publish books, music, circulars, etc. The B&O tax is calculated on gross receipts. Photocopying documents is considered Retail.
- Other Business: Any business activity that does not fit in one of the first six classifications. Any business that is not subject to another B&O tax classification must report under this category also. The B&O tax is calculated on the gross receipts of the business.
The following section discusses the most common exemptions and deductions from the B&O tax.
- Sale, lease, or rental of real estate. However, no exemption is allowed for a license to use real estate or for amounts received as commissions
- Farm products or edibles raised, produced, or manufactured within Washington and sold by the farmer or gardener
- Casual and isolated sales, such as an accountant selling their office furniture
- Sales related to motor vehicle fuel
- Liquor sales
Note: Costs of doing business like insurance, rent, or salaries are not valid deductions.
- Cash discounts taken by customers
- Manufacturing, selling, or distributing motor vehicle fuel
- Credit losses or bad debts sustained by sellers
- Gross receipts reported to and taxed by another local jurisdiction in Washington