Are you planning on starting your own company? Congratulations! Forming your own company can be an exciting time, although we know the process may feel overwhelming. If you’re setting up a corporation, you might be curious about the next steps and if you can handle the formation process on your own.
The good news is that it’s entirely possible to form your District of Columbia corporation on your own, entirely online. However, many corporations partner with trustworthy business service companies like ZenBusiness to avoid the hassles of red tape, streamline the setup process, and ensure complete compliance.
We’ll take you through the entire process of setting up your corporation to get your District of Columbia business off the ground in no time.
How do I form a corporation in the District of Columbia?
Steps to Incorporate in the District of Columbia:
- Name Your Corporation
- Appoint Directors
- Choose a District of Columbia Registered Agent
- File District of Columbia Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
You’ll officially register your District of Columbia corporation with the local government by filing your Articles of Incorporation. However, there are steps you’ll need to take care of before and after this filing. We’ve simplified the process into 10 steps for forming your District of Columbia corporation.
Step 1: Name Your Corporation
The first step you’ll take is deciding on a name for your company. This part of the process generally allows for more creative thinking and lets you really narrow in on a name that suits your brand and line of service. You may already have a few names in mind. We recommend compiling all of your options into a list and ensuring they meet Washington, D.C., guidelines (such as not including the word “FBI” in the title).
Once your list is ready, you’ll need to do a quick online search to determine if your chosen names are available. In Washington, D.C., you must opt for a unique corporation name, so you’ll want to start at the District of Columbia, Department of Consumer and Regulatory Affairs (DCRA) online portal. You’ll need to create an account, after which you can perform a corporation name search. Narrow down the names on your list based on availability, then select the name you like most.
Once you have your name, you’re ready to add an official corporation designated to the end. Corporation designators include:
If you decided to name your company “DC Investigative Services,” for example, this name would become “DC Investigative Services, Corporation” or “DC Investigative Services, Inc.” You can select any of the above designations.
Once your name is finalized, you may want to reserve it to ensure no other corporation takes it. You’ll need to fill out the Name Reservation and Transfer Form and submit it online through the D.C. web portal or mail it. The filing fee is $50.
If you mail your form, you’ll send it to:
Department of Consumer and Regulatory Affairs
P.O. Box 92300
Washington, D.C., 20090
Your corporation name reservation is valid for up to 120 days.
There are a few other decisions you might want to make once your corporation name is reserved.
- Buying a domain. If you plan on creating a website for your Washington, D.C., corporation, you’ll need to find an available web domain. To do this, you can conduct a free domain search. Once you’ve found a domain you like that is available, you can hire ZenBusiness to register the domain on your corporation’s behalf.
- Securing a DBA name. If you want to conduct business or sell products or services under a name that differs from your official corporation name, you’ll need to register a “doing business as” (DBA) name. In the District of Columbia, this practice is referred to as operating under a trade or fictitious name. You can secure a trade name online for $55 via the government web portal.
- Applying for a trademark. If you want to trademark your corporation’s name, you’ll first need to perform a search for any existing trademarks on your name. If no trademark exists, you’ll register on the United States Patent and Trademark Office (USPTO) website. There is no D.C. trademark law, so registration is automatically at the federal level.
Step 2: Appoint Directors
Now, you’re ready to appoint directors to your corporation. You’ll be required to appoint at least one director to your Washington, D.C., company to act on your company’s interests. You can also appoint multiple directors or a board of directors.
Directors will help manage your corporation and should always act within the best interests of the company and shareholders.
You’ll also designate an incorporator who will sign your company’s Articles of Incorporation. This individual can be an owner or director but does not have to be.
Step 3: Choose a District of Columbia Registered Agent
Once you’ve selected a name, director(s), and an incorporator, it’s time to move on to choosing your registered agent. All states require corporations to select a registered agent, and the District of Columbia (although not a state) is no different. Your corporation’s registered agent will work on your behalf as a go-between for the local government and your company. They’ll accept legal paperwork (such as notice of a lawsuit) and important communications from the government and pass them along to your corporation at an appropriate time. A registered agent must have an operating address in the District of Columbia. They must also be over 18 and available during normal business hours (9 a.m. to 5 p.m., Monday through Friday). Your registered agent cannot use a P.O. box as their operating address — they must have a physical location in D.C. You or someone in your corporation can act as your own registered agent, but there are many reasons businesses often choose outside registered agent services or agencies. Here are a few benefits you’ll receive by working with an outside registered agent service:
- Privacy. When you decide to serve as your own registered agent in D.C., some of your private information will become public.
- Protection. If you act as your own registered agent, your operating address will most likely be your office address. This means the government could contact you during regular business hours with important legal papers, like a summons or subpoena. Receiving sensitive documents such as these could interrupt or hurt business deals or relationships if clients or investors are present.
- Flexibility. As your own registered agent, you’re required to keep normal working hours at your operation address. This leaves you tied to your desk, instead of working different hours, traveling, or prospecting outside of the office.
Step 4: File District of Columbia Articles of Incorporation
Now that you’ve chosen a registered agent for your corporation, you can register your business with the government by filing your Articles of Incorporation. This form allows the government to recognize your corporation officially, so you can open for business.
You can file your Articles of Incorporation online via the District of Columbia portal. To submit this document, you’ll need the below handy:
- Your official corporation name. Make sure your designator (Inc., Co., etc.) is included.
- Your registered agent’s name and address. Supply your agent’s full name and operating address, which must be in the D.C. area.
- Your corporation’s number of authorized shares. List the number of shares your company plans to authorize.
- Names and addresses. Detail the full names and addresses of all shareholders, directors, and officers that meet the criteria listed in the instructions on the form.
- The incorporator’s signature. All of the incorporators must list their names and addresses and sign and date the form.
The fee structure varies, depending on your corporation’s capital, but starts at $220.
You’ll also have to raise $1,000 in capital before you can proceed with operating your corporation, contingent to D.C. law.
Step 5: Create Corporate Bylaws
The next step is to hold a meeting with all of your shareholders to decide how the corporation will operate, be structured, and managed. You can detail shareholder regulations and discuss any operational agreements, financial instructions, and additional clauses. These bylaws will also explain how your board of directors will function, set a cadence for shareholder meetings, and dictate a general hierarchy. You’ll want to take notes so that this conversation can be officially put into writing.
The document, also known as your corporate bylaws, is significant since it details how the corporation operates, and it should be publicly available to all shareholders in your company.
There are no set guidelines from the District of Columbia government around these bylaws, but you’ll want to ensure they do not contradict any information in your Articles of Incorporation.
Step 6: Draft a Shareholder Agreement
Next, you’ll need to draft a shareholder agreement. This contract will outline any rules and regulations that should be followed between the shareholders and the company. This document should match up with the general purpose of your company’s bylaws, offering more insight into shareholder votes, responsibilities, rights, financial allowances, and limitations.
This document is not public-facing and only available to your shareholders, who should all agree to its terms and sign it.
Step 7: Issue Shares of Stock
Now, you’re ready to start issuing shares of stock on behalf of your corporation. All corporations are required to issue shares, and this process can involve careful company oversight. When you filled out your Articles of Incorporation, you specified the number of shares to be issued for your company. When you issue shares, make sure you issue this number of shares or less. Do not exceed this number.
As noted, all District of Columbia corporations need $1,000 in capital to get started, but many raise even more in funding. Once you know how much funding your company needs to open its doors, you can divide this figure among the number of shares you want to issue.
Corporations can choose to issue stock shares privately and publicly. If you issue your stocks privately, the shares will usually be dispersed among the corporation’s current shareholders. If you issue stocks publicly, these shares are open to anyone in the marketplace.
If your company decides to issue stocks publicly, you will be legally required to file quarterly statements with the U.S. Securities and Exchange Commission (SEC). These quarterly reports will record how many stocks you’re issuing and note the parties who purchase them. You can access this form online here.
Your shares can only be issued once, but they can be sold or traded. You’ll also need to indicate the shares you’ve issued on your biennial reports.
Find out more about the District of Columbia’s statute on shares here.
Step 8: Apply for Necessary Business Permits or Licenses
Now, you’re ready to obtain a general business license to operate in the District of Columbia. All corporations in D.C. are required to hold a business license. You can obtain one on the District of Columbia Business Center website.
To obtain a basic business license (BBL), you’ll need to follow four steps:
- Register your Articles of Incorporation. See step three.
- Set Up an EIN with the IRS. See step nine.
- Register with the Zoning Administrator. You’ll need to secure a Certificate of Occupancy if you’re working out of an office space or a Certificate of Home Occupation if you’re working out of a residence.
- Register with the D.C. Office of Tax and Revenue.
- Fill out a BBL application. You can apply online at the D.C. Business Center.
You may also need to obtain a special license or permit, depending on your corporation’s industry. The Business Center website for the District of Columbia can also help you secure any additional licenses or permits that your company may need. You can learn more on the District of Columbia corporations licensing page and perform a search to determine if your industry requires additional filings.
Step 9: File for an EIN and Review Tax Requirements
Next, you will need to register your District of Columbia corporation with the Internal Revenue Service (IRS). All corporations must sign up for an Employer Identification Number (EIN), which allows you to file taxes, set up financial accounts, and hire or pay employees. Your EIN serves as your company’s Social Security number.
You can quickly apply for your corporation’s EIN online and receive it in a matter of minutes. You can get started by filling out the online form on the IRS website. The process is fast and free.
The District of Columbia imposes a corporate franchise tax with a minimum of $250.
You’ll also want to consider other tax requirements, like sales tax. If your company is collecting sales tax in the District of Columbia, you’ll need to set up a MyTax account online. This allows you to register for a sales tax account with the Office of Tax and Revenue.
Step 10: Submit Your Corporation’s First Report
In the District of Columbia, you’re required to file biennial reports to keep your corporation in good standing with the government. These reports are mandatory, and failure to file on time could result in fines or your corporation’s revocation.
Your biennial report is due by April 1 every two years and costs $300 for for-profit corporations and $80 for nonprofit corporations.
You can file your biennial report online or access it online and send it via mail. This report will need information, including your corporation name, registered agent’s information, operating address, director names and addresses, and share information.
How Much Does it Cost to Start a Corporation in the District of Columbia?
The administrative costs of forming a corporation in the District of Columbia can add up. While specific costs vary by industry and filing method, here’s a quick look at what you can expect to pay to form a corporation in the District of Columbia:
- Reserve a name (optional): $50
- Reserve a trademark (optional): $55
- File your Articles of Incorporation: $220 (starting cost)
Your corporation should be prepared to pay a minimum of $220 in setup fees to get your corporation registered and operating. This fee does not include the $300 biennial fee or the costs of special licenses or permits. If you want peace of mind to focus on growing your business, reach out to ZenBusiness. We’re available to help you file your paperwork, with business services packages starting at just $49 per year.
What are the Benefits of a Corporation in the District of Columbia?
There are many reasons entrepreneurs in the District of Columbia opt to form a corporation over other types of companies.
Some benefits to forming a corporation include:
- Better protection. If you decide to form a corporation, your company finances and liabilities will be separated from your individual accounts. This offers you liability and better protection in case of a lawsuit.
- Becoming official. Many clients feel safer working with a registered business over a self-employed individual. Becoming a corporation can legitimize you in others’ eyes.
- Stock options. Since corporations can sell stocks, you can more easily raise the capital you need upfront to get running. This also can help you grow down the line.
- Global capabilities. Corporations are allowed to conduct business internationally, making this an ideal company type for those with overseas agreements.
There are also some downsides to forming a corporation. They include:
- Double taxation. Corporations are subject to double taxation, meaning your earnings are taxed twice — once when you report them on your corporate taxes and again on your individual taxes.
- Rigid reporting requirements. Record keeping is extremely important for corporations since they have regulations around paperwork, such as recording shareholder meeting minutes. You might find it helpful to hire an accountant in-house or on contract to help your corporation remain compliant.
- Management rules. Corporations have many rules that other companies do not, such as requirements to hire directors and issue stocks. Other business types have more flexibility in how their company is run and managed.
How is a District of Columbia Corporation Taxed?
Corporations are taxed depending on the type of corporation they’re registered as. By default, all corporations are registered as C corporations, unless otherwise specified. The main types of corporations include: C corporations, S corporations, and nonprofit corporations.
C corporations are taxed as separate entities. In other words, the C corporation must turn in a separate corporate tax return. Individual shareholders and owners must also turn in personal tax returns that denote company profits, leading to double taxation.
S corporations are also known as pass-through entities because the profits essentially pass through the corporation to the shareholders, allowing them to avoid double taxation. However, in the District of Columbia, S corporations are taxed the same way as C corporations.
If you are a nonprofit corporation, your company can apply to be exempt from federal taxes. Employees would still pay taxes on their salaries.
District of Columbia Corporation FAQs
Does running a corporation in the District of Columbia involve more paperwork than running other types of businesses?
Yes, corporations typically have more filing requirements than other types of companies, such as limited liability companies (LLCs). In the District of Columbia, corporations must keep track of their records (with specific bookkeeping requirements) and file recurring paperwork like the biennial report.
What is the difference between an LLC and a corporation in the District of Columbia?
LLCs are pass-through entities that avoid double taxation. LLCs also have far fewer reporting requirements and much more flexible management. They also do not issue stock shares and are not internationally recognized.
Want to learn more about how LLCs are different from corporations? Check out our helpful guide.
Can you e-file District of Columbia corporate returns?
Yes, corporations can e-file their D.C. tax returns. You can file D.C. corporate taxes online via the D.C. Office of Tax and Revenue.
Does the District of Columbia have a corporate income tax?
Yes, the District of Columbia does have a corporate income tax that you’ll be expected to pay. This tax is also referred to as a franchise tax.
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