Service area · Kent, Washington
Bookkeeping for Kent contractors.
Kent has more contracting businesses than almost anywhere in King County, and one of the more complicated city tax setups in Washington. Here is what that means for your books, and what I do about it.
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Kent · city tax profile
2026
Gross receipts + sq ft
First $250,000
0.1%
0.2%
Over 4,000 sq ft
Quarterly
City B&O tax
Kent's business tax is not the state's.
Most contractors know about the state B&O tax. Fewer know that Kent runs its own, filed separately, on its own schedule, through the city rather than the Department of Revenue.
If you do business in Kent you are likely subject to it, whether your shop sits inside the city limits or not. What changes is what you report.
- Based inside Kent. You report both components, the gross receipts tax and the square footage tax, and pay whichever of the two is larger.
- Based outside Kent, working in Kent. You report the gross receipts tax only.
- The gross receipts tax starts above $250,000 of Kent income in a calendar year. A credit means you are taxed only on income over $250,000 annually, or $62,500 per quarter.
Gross receipts rates
0.1%
0.125%
0.2%
Filing
Four deadlines, and a penalty that climbs.
Kent’s return is quarterly by default, due the last day of the month after each quarter closes. Miss one and the penalty steps up every month it stays open.
Late penalties
9%
19%
29%
A late quarter costs nothing to prevent and up to 29% of the tax to fix. The dates belong on a calendar, not in your head.
The rate split
The same job, taxed twice as hard.
Under Kent City Code, labour billed to the property owner is a retail sale. The identical labour billed to a prime contractor is a wholesale sale. That one distinction doubles the rate.
Same crew, same job, different invoice.
Most contractors do both during a year. If your books put every dollar of construction income into one account, those figures cannot be split at filing time. You end up reporting everything at the higher rate and overpaying, or under-reporting and carrying the risk of an assessment.
Keeping prime work and subcontract work separate in the ledger, all year long, is what turns that return into a ten-minute job instead of a weekend.
01
Prime and subcontract income in separate accounts.
02
Each job tagged to the right classification as it is entered.
03
A quarterly figure you can file straight from.
04
A record that stands up if the city asks.
Square footage tax
The one that surprises people with a shop.
If you keep a place of business inside Kent, you also calculate a square footage tax, and you pay the greater of that or the gross receipts tax.
Quarterly thresholds and rates
$0.12 / sq ft
$0.12 / sq ft
$0.02 / sq ft
Two details that catch people
- Cross the threshold and the whole area is taxable, not just the part above the line. A 4,100 square foot warehouse is taxed on all 4,100.
- All of your Kent locations count together. Two buildings of 2,500 square feet each are 5,000 square feet for this purpose.
A 4,000 square foot threshold is low for a contractor with a shop, a parts store and a covered bay. In a slow revenue year with a big building, the square footage tax can be the larger of the two numbers.
That is a thing to find in your own books, not in a letter from the city.
Sales tax
Sales tax follows the job, not your office.
Washington sources retail sales tax to where the work is performed. A Kent contractor working in Seattle charges the Seattle rate. The same crew in Auburn the following week charges Auburn’s.
What that means for your books
- Your invoicing has to carry the job location, not just the client.
- Your bookkeeping has to keep those rates apart across jobs.
- Rates change quarterly, so a rate set once and forgotten drifts out of date.
Contractors who run one default tax rate across every invoice are the ones who find the problem at audit.
The work
What I actually do about all this.
I keep the books. I do not file your taxes and I am not your CPA. What I do is make sure the numbers behind every one of those filings are right, and hand your tax preparer statements they can work from without rebuilding anything.
- Prime and subcontract income tracked separately all year, so your city B&O return can be split correctly instead of estimated.
- Job costing that matches how you bid, so you can see which jobs made money and which only looked like they did.
- Every account reconciled to the penny against its real statement, every month.
- The same reporting pack every month, so March and September can be compared without squinting.
- Filing dates on a calendar before they turn into a 29% penalty.
Where to start
Behind on the books, or not sure they would survive a look? Start with cleanup. Running fine but want them kept right? Start with monthly.
Questions
Questions Kent contractors ask.
Don’t see yours? Email me at paulaleksic@apcbookkeeping.com
Most likely yes. Kent’s B&O tax generally applies to business conducted in the city regardless of where you are based. The difference is that from outside the city you report the gross receipts tax only, not the square footage tax. The city’s Tax Division will confirm your situation.
The gross receipts tax applies above $250,000 of Kent income, but that threshold decides what you owe, not whether you are registered and expected to file. Get your registration status in writing from the city rather than assuming silence means no.
For a Kent filing, yes. You cannot separate prime work at 0.1% from subcontract work at 0.2% out of a single bucket. Splitting it is a setup job, done once, and then it maintains itself.
Then we start with cleanup: rebuild the ledger from your statements, reconcile every account, and find out what is actually owed before anyone files anything. Multi-year cleanups are routine work here.
The books are kept remotely, which is why my location matters less than my understanding of yours. Calls and screen shares as often as you want them.
Book a free consult
Tell me where the books stand.
Fifteen questions about your business and your books. I read every one personally, and you get a straight answer about what it would take to put your Kent filings on solid ground.