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Business Licensing

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Business Licensing

Business Licensing - Business licensing is responsible for the licensing of all businesses conducting business within the city limits of the City of Shelton. For more information use the links below or call (360) 432-5178.

Doing Business in the City of Shelton

City of Shelton 's Business License Requirements and Business and Occupation Tax (B&O)

  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 tax report must be filed, regarless of amount due.

Business License Application (PDF)
Business License Home Occupation Permit & Checklist (PDF)

Current B&O Tax Rates:
B&O tax is calculated on gross receipts at a rate of 0.1% for all classifications.

B&O Tax Payment Procedures

  1. The tax return form must be completed and returned with payment of taxes on or before the last day of the next month following the end of the assigned reporting period covered by the return.
  2. 20th of the following month.
  3. 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.
  4. When submitting your tax return:
    • Use the returns provided.
    • Use the pre-addressed envelope.
    • Make check or money order payable to City of Shelton. Do not send cash.
    • Advise the City of Shelton of changes in address or ownership.
    • Penalties and interest are due if tax returns are not filed and taxes paid by the due date.

Penalties
1-30 days late - 5% of tax due ($5 minimum)
31-60 days late - 15% of tax due ($5 minimum)
61 days & over - 25% of tax due ($5 minimum)

Reporting Frequency
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.

Quitting Business
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. Applications are available at 525 West Cota, or call 360-426-9731.

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 the General Contractor pays tax calculated on their gross, and each of his subs, 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 is the 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 is 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. B&O tax is calculated on the value of products manufactured, as determined by selling price.
  • Wholesaling is sellers of products to persons other than consumers are considered to be wholesalers. The B&O tax is calculated on the wholesale selling price.
  • Retailing is businesses that sell products and specific services to consumers are retailers. Taxable retail services include those generally performed on property, such as repair, but not personal or professional services, such as doctors, attorneys, or accountants. The B&O tax is calculated on gross receipts.
  • Printing/Publication of newspapers, magazines and periodicals are taxable under this classification, as well as persons who both print and publish books, music, circulars, etc. B&O tax is calculated on gross receipts. Photocopying documents is considered Retail.
  • Construction is the business of building, repairing or improving any street, road, highway, etc. which is used for foot or vehicular traffic and is taxable under this classification. Constructing and repairing new or existing buildings or other structures upon real property is also included. B&O tax is calculated on gross receipts.
  • Services and Other Activities: Businesses that provide personal and professional services, such as lawyers, doctors, financial institutions, real estate brokers, insurance brokers and solicitors, and accountants, are subject to the B&O tax under this classification. Any business that is not subject to another B&O tax classification must report under this category also. B&O tax is calculated on the gross receipts of the business.

Exemptions and Deductions Allowed for Certain Business Activities:
The following section discusses the most common exemptions and deductions from the B&O tax. If you have questions about specific exemptions contact the city.

Exemptions

  1. Sale, lease, or rental of real estate. However, no exemption is allowed for license to use real estate or for amounts received as commissions.
  2. Insurance agents who pay insurance premium taxes to the state are not subject to tax.
  3. Farm products or edibles raised, produced or manufactured within Washington and sold by the farmer or gardener.
  4. Casual and isolated sales, such as an accountant selling his or her office furniture.

Deductions

  1. Cash discounts taken by customers
  2. Manufacturing, selling or distributing motor vehicle fuel
  3. Credit losses or bad debts sustained by sellers
  4. Gross receipts reported to and taxed by another local jurisdiction in Washington
  5. Fuel, Alcohol

Costs of doing business like insurance, rent or salaries are not valid deductions.

Questions?
Please call (360) 432-5118, or write to the City of Shelton at
525 W. Cota St., Shelton, WA 98584