Start your business
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.
1Name your corporation
2
Appoint directors
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.
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
Corporations Division
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.
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.
You can team up with a professional and efficient outside registered agent service in the District of Columbia, like ZenBusiness. We can communicate and pass along all important government documents and communication.
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:
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.
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.
You can get professional help creating your corporation’s bylaws with ZenBusiness. For just $49 per year with our starter package, provide registered agent services, and provide you with a corporate bylaw template that you can fully customize.
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.
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.
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:
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.
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.
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.
Let us take care of the unpleasant paperwork, allowing you to stay focused on your business’s future. With our business formation services, you won’t have to worry about mailing in documents: We’ll handle each step with the government and let you know when your corporation becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low price.
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:
There are also some downsides to forming a corporation. They include:
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.
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.
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.
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.
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.
Already a District of Columbia small business owner? Learn how ZenBusiness can help you run or grow your District of Columbia small business today!
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