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 run a service-based business in Washington, big changes are coming that could affect how you track and record sales in your books. On 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 never thought much about sales tax before, these changes may impact how your revenue is categorized, especially if your business sells both services and products, offers memberships or packages, or includes a digital component like online access or recorded content. For many small businesses in Seattle and across Washington, this is the right time to make sure your bookkeeping is set up to keep everything clear and accurate.
What’s DAS?
Digital Automated Services are services delivered electronically, such as online programs, recorded content, or access to digital platforms. Even when there’s a human element (like live facilitation), some services may now be considered taxable under the updated rules.
Who Could Be Affected
Many service-based businesses offer more than their core service. This could be:
Fitness, wellness, or coaching providers that sell merchandise, memberships with digital access, one on one sessions, group programs, or ticketed events and webinars
Food and hospitality businesses that offer packaged goods or event add ons
Home and personal care services that also sell related products
Creative or event businesses that provide rentals, decorations, or online planning tools
Even if your primary service is not taxable, changes in state rules can affect how additional items or packaged services are handled.
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 Bookkeeping Matters in Times of Change
When state regulations change, strong bookkeeping becomes even more important. Accurate records help you:
Track different types of sales clearly
Maintain organized records for financial reporting and compliance
Understand how your revenue is divided between services, products, and other income streams
If you are not sure whether your bookkeeping system is set up to handle these changes, now is the time to review it. A short review today can help you avoid costly clean ups later and keep your business running smoothly.
How Sequoia CPA Supports Service Based Businesses
I work exclusively with service based small businesses in Washington, helping them keep their books accurate, organized, and ready for whatever changes come their way. My support includes:
Reviewing your bookkeeping setup to ensure it reflects your current business model and revenue streams
Adjusting systems so you can track different income types with ease
Providing ongoing bookkeeping and advisory support so your numbers stay clear year round
When you work with Sequoia CPA, you get more than bookkeeping. You get a partner who understands your industry, your local market, and the importance of financial clarity.
Final Thoughts
State level changes are a normal part of running a business, but you do not have to navigate them alone. With strong bookkeeping and the right partner, you can adapt easily and stay focused on your clients.
If you are ready for a bookkeeping process that supports your growth and keeps your business prepared for change, let us connect. I work with service-based founders who value financial clarity, strategic support, and a trusted local CPA by their side.
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.