My business is in WA state, I am the owner and the only employee. QuickBooks system does not let me step up payroll account without "Unemployment Insurance (UI)", why?

Unemployment Insurance (UI) is generally required for employers, thus the reason why you aren't able to set up your payroll, tadacoolbank. I'll share my insights to give you clarification with regard to your concern.

In Washington State, any business that pays wages to employees whether it's small or big is mandated to pay unemployment taxes. The requirement of Unemployment Insurance coverage is broad as it most employers, even those who are both owners and employers of their business are required to comply. Thus, the reason why you aren't able to set up your payroll account. Additionally, the employers must report their wages quarterly and pay the corresponding UI tax as it varies based on the overall state UI trust fund balance.

However, it is best to consult directly with the Washington Employment Security Department and your local tax agencies to be informed about the most up-to-date and accurate UI requirements. This will avoid potential legal issues and ensure that you meet your state obligations.

Moreover, you can refer to this page to learn how to amend your state unemployment insurance in QBO to keep your SUI tax liability accurate: Update your State Unemployment Insurance (SUI) rate.

Furthermore, here's an article you can read to be guided on how to manage payroll in QBO: Create and run your payroll.

Remember to regularly review your UI status as your business grows and changes, tadacoolbank. Feel free to reach out by revisiting this thread if you encounter any other issues with your QuickBooks payroll setup. We're help to help.