Washington’s 2025 Sales Tax Update: What Service Based Businesses Should Know
This article is for informational purposes only and does not constitute tax advice.
If you own a service based business in Washington, important changes are coming that could affect how you track and report sales. Beginning October 1, 2025, updates under ESSB 5814 will expand the definition of “retail sale” and remove certain exemptions for Digital Automated Services (DAS).
Even if you have not dealt with sales tax in the past, these changes may impact how your revenue is categorized, especially if your business offers digital access, packaged services, or products in addition to your core service.
What’s DAS?
Digital Automated Services (DAS) are services delivered electronically, such as:
Online programs or recorded content
Access to membership portals or digital platforms
Automated or technology driven services
Even when human involvement is part of the service, such as live coaching, webinars, or facilitated programs, the new rules may still classify these activities as taxable.
Who Could Be Affected
Many Washington businesses combine services with products, memberships, or digital features. Some industries likely to be affected include:
Fitness, wellness, and coaching providers that sell memberships with online access, group programs, or ticketed webinars
Food and hospitality businesses that offer packaged goods, event add ons, or bundled experiences
Home and personal care services that sell related products alongside services
Creative and event businesses that include rentals, decorations, or online planning tools
Even if your primary service is not taxable, these changes may affect how additional items, packages, or digital offerings are treated under Washington sales tax law.
For the most accurate and up to date information, you can review the official Washington State Department of Revenue guidance here: WA DOR Sales Tax Changes - ESSB 5814.
Why These Sales Tax Changes Matter for Bookkeeping
When tax rules shift, accurate bookkeeping becomes essential. Properly tracking sales by category helps your business:
Separate taxable and non taxable sales
Maintain clean financial records for compliance
Reduce the risk of penalties, interest, or costly year end cleanups
Understand how your revenue is divided across services, products, and digital streams
Strong bookkeeping is your first line of defense in staying compliant and financially organized.
What Business Owners Should Do Now
Review your current bookkeeping setup to ensure income streams such as services, products, and digital access are tracked separately
Check how your revenue fits into the updated rules and identify areas where sales tax may now apply
Stay informed with Washington Department of Revenue guidance since regulations can evolve
Work with a professional if you are unsure whether your books are prepared for the change
Expert Support for Service Based Businesses
As a Washington CPA specializing in service based businesses, I help small business owners stay ahead of regulatory changes while keeping their books accurate and organized. My role is not just bookkeeping. It is making sure your financial systems are built to handle growth, compliance, and clarity.
With upcoming changes like ESSB 5814, now is the right time to ensure your bookkeeping is set up correctly. By addressing it early, you can avoid costly cleanups later and keep your business focused on serving clients.
Ready to make sure your books are accurate and ready for change?
Washington’s 2025 sales tax update is the perfect reason to review your bookkeeping. Let’s make sure your systems are organized, accurate, and built to support your business year round.