Lynnwood, WA Local Taxes & Fees: Business Tax Classification (2026)

010 defines the three license classes: a "general business" occupies a fixed place of operations in Lynnwood, a "general nonresident business" performs work in the city from an outside office without a fixed local location, and a "home occupation" runs from a dwelling as an activity clearly incidental to its use as a residence. 020 makes operating in any of the three categories without a license unlawful. 104 LMC sets the resulting charges at $64 for each employee working 14 hours or fewer per week and $124 for each employee working 15 hours or more per week, on top of a $166 initial base fee or $133 renewal base fee; home occupations pay a flat $40 per year instead.

042 lets the city true up the fee at renewal, billing a prorated additional fee if the reported employee count during the prior year exceeded the initial estimate, or issuing a prorated refund if it came in lower. 060 subjects general business payrolls to audit against quarterly Employment Security or Labor and Industries reports, and if a review finds the business under-reported by 20 percent or more, the city adds a penalty equal to 20 percent per annum of the additional fee owed, plus its accounting, legal or administrative costs of running down the shortfall.

050 separately exempts businesses grossing $5,000 or less annually in the city, government entities, and 501(c)(3) nonprofits from the fee, though they must still apply for the license itself.