Start your business
Are you getting ready to start an LLC in the District of Columbia? Congrats! Starting your own business is a huge step, and we’re sure you’re excited about where this business prospect could lead.
If you’ve never formed a business, you may have some questions about getting your limited liability company (LLC) off the ground. Since all states have requirements that LLCs need to follow, you might also be curious about how LLCs operate in the District of Columbia.
In this guide, we’ll take you through the entire LLC creation process so that you’ll know what to expect each step of the way. If you’re worried about the paperwork, legal, or tax requirements you’ll need to meet to set up your LLC, don’t worry — we’ll walk you through how to handle everything and explain how an LLC business service can help with the administrative tasks.
The good news is that LLC formation in the District of Columbia isn’t any more difficult than in the rest of the country, even though the District of Columbia is a territory, not a state. This territory has a local government with rules and regulations that businesses within its borders must follow, similar to a state government.
1Name Your District of Columbia LLC
Appoint a Registered Agent in the District of Columbia
Once you’ve decided to form an LLC in the District of Columbia, there are a few steps you’ll need to follow. First, you’ll want to register your LLC with the local government in D.C. By doing so, you’ll create a public record of your LLC in this area, which allows the local government to deem you as an official business and contact you as needed.
However, before you can register your LLC officially, you’ll need to decide on a few important aspects of your LLC. These include deciding on an official name for your LLC and choosing a registered agent for your company. You’ll also need to file all official paperwork for your LLC, draft an Operating Agreement, and ensure your company is set up to follow local and federal tax laws.
We know all of this information can seem overwhelming, but the LLC process is very straightforward. To help, we’ve created a five-step process to get your LLC up and running.
Naming your LLC is usually the most enjoyable and creative part of the setup process. When selecting an official name for your company, consider a name that helps market your brand by easily communicating the goods or services you offer to customers. It’s a good idea to come up with a few memorable names and jot them down on a list during this step.
Once you have your list ready, you’ll need to go online to the D.C. government website to do some research so you can lock in your company’s final name.
LLC names must be unique, so if another company has already registered the name you want, you’ll need to choose another one. To complete this search, you’ll need to create a login to the District of Columbia Department of Consumer and Regulatory Affairs (DCRA) web portal. From there, you can search if the name you’ve chosen is available. Once you’ve found an available name you like, you can move on to the next step. Be sure to also review the statute on naming your LLC and ensure you do not include words that aren’t allowed, such as “FBI.”
Next, choose an official LLC designator. An LLC designator is a suffix at the end of your business name that indicates your business is an LLC. For instance, if you chose the name “Lisa’s Designs,” you’ll need to add a designator at the end, like “Lisa’s Designs, LLC.” You can choose from a list of approved designators. We’ve listed all the possible options below:
Limited Liability Company
Once you’ve chosen a designator, you have your company’s official name! To ensure there are no complications with this name, it’s a good idea to reserve your name with the D.C. government. You can do this online through the state’s web portal or fill out the Name Reservation and Transfer form and mail it to:
Department of Consumer and Regulatory Affairs
PO Box 92300
Washington, DC 20090
Name reservations are valid for up to 120 days and cost $50 to file.
Throughout your name search process, you might come across a DBA form when forming your LLC. A DBA, or “doing business as,” form is paperwork you’ll fill out if you decide to operate under a name that is different than your registered LLC name. For instance, if your company’s registered name is “Custom Concepts Agency, LLC,” but you sell your services as “CC Agency,” you’ll need to register this secondary name as a trade or fictitious name. You’ll need to pay $55 to register your trade name with the D.C. government.
You may also want to look into registering a trademark for your business name or logo. In D.C., you can only do this at the federal level since there is no D.C. trademark law. You can check to see if your trademark is available with the United States Patent and Trademark Office (USPTO) and register it there.
Once you’ve reserved your LLC’s official name, you’re ready to appoint a designated registered agent. All U.S. states require LLCs to choose a registered agent, and D.C. is no different.
Your registered agent is a person or company who works on your behalf to receive and pass on all legal paperwork. They’re essentially a middleman between your company and the local government.
This means that your registered agent might receive sensitive paperwork at any point throughout the business day. As a result, your agent will need to hold regular office hours at a D.C. office. They must be present during the workday, and their operating address cannot be a P.O box.
Some LLCs decide to act as their own registered agent, and you might wonder if you should do the same. While this is perfectly legal, there are some important things to consider before making this decision.
First, if you act as your company’s registered agent and your LLC becomes part of a lawsuit, you may be given service of process in the middle of your workday, at your office, where clients or prospective partners could be present.
If you act as your company’s registered agent, it’s possible that some of your personal information could become public record.
To avoid common issues, many LLCs opt to partner with an outside registered agent service like ZenBusiness that can be served legal paperwork on your behalf. Best of all, finding a high-quality, experienced registered agent is more affordable than you think.
Now that your name is ready and you’ve chosen a registered agent, it’s time to file your LLC’s official paperwork. Your Articles of Organization — sometimes referred to as a Certificate of Organization in other states — will officially register your LLC with the District of Columbia government.
You can register your LLC by filling out the Articles of Organization form and submitting it online or by mail. Filing this form will cost $220, which you can pay online or via check. Note that if you mail your forms, you’ll also need to include form RA-1, which is the registered agent written consent form (if you file online, you don’t need to worry about this).
You’ll need to fill out the below fields when completing this form:
LLC company name. This is your company’s official name (with the LLC designator included).
Your company’s street address. This is your LLC’s office address. If you do not have an office, you can use your home address.
Your registered agent’s name and address. This is the name of the person or company you’ve designated to act as your registered agent, along with their official office address (which must be in the District of Columbia).
Miscellaneous information. Here, you’ll include any additional information the D.C. government might need to know about your LLC, like whether it’s a part of a Series LLC (nested under a parent company).
The members’ names and addresses. Members of your LLC or other parties who have a financial interest in your company should include their names and addresses here.
Organizer’s name, address, and signature. Lastly, you’ll sign and date the form before submitting it.
Submitting your Articles of Organization form is fairly simple, but if you’d like help, you can work with a trusted business partner like ZenBusiness to ensure this form (and others) are completed and filed correctly.
An Operating Agreement is a contract that details your LLC’s structure and key rules and regulations about company operations. In the District of Columbia, you’re not required to have an Operating Agreement, but getting one can ensure your LLC runs more smoothly and prevent and resolve any conflicts between members and other vested parties.
Your LLC’s Operating Agreement lays out how your company will be run, detailing your management style and member powers and limitations. It can even explain member voting structures to help handle disagreements if or when they arise. You’ll want to make sure all members read, agree to, and sign your LLC Operating Agreement.
Although Operating Agreements are considered a smart move for LLCs with multiple members, they can also be beneficial even if you’re the only member of your LLC. Here’s why:
Your agreement can detail how your business should be run if you’re incapacitated or unable to manage your company. If you don’t have an agreement, the way your company is managed will be handled by the District of Columbia government.
This agreement can further demonstrate the separation of your personal and business assets, allowing you to protect yourself from legal liability that might occur if your LLC is sued.
Creating an Operating Agreement requires a bit of a time investment since this document details how your LLC will be run regarding business activities. Luckily, you don’t have to construct this all from scratch. You can work with a trustworthy partner like ZenBusiness, who can supply you with an Operating Agreement template to guide you.
Now that you’ve officially registered your company as an LLC in the District of Columbia, you’re ready to get your tax information set up with the Internal Revenue Service (IRS). To do this, you’ll apply for an Employer Identification Number (EIN).
Think of an EIN like your business’s Social Security number. It helps identify your company to the government and can be used when filing taxes, opening business bank accounts, and hiring and paying employees.
If you have employees or other members in your LLC, you’ll need to apply for an EIN. If you’re the sole member of your LLC, you aren’t required to secure an EIN, but it can be beneficial. Even if you’re the only member of your company, your EIN helps keep your business and personal accounts separate and can make filing your taxes easier every year.
Preparing for the legwork that it takes to set up an LLC can help your company start on the right foot. Part of this includes preparing for all business expenses upfront, so there are no (or few) surprises.
Here’s a quick estimate of how much you can expect to pay when setting up your LLC in the District of Columbia:
Cost to reserve your business name (optional):
Cost to file your Articles of Organization: $220
Cost to apply for an EIN: $0
This means the total cost of your LLC’s initial setup would be at least $220 (or more with expedited filing fees). This does not include the price of any special permits or licenses you may have to obtain. Specifically, in the District of Columbia, LLC owners must obtain a Certificate of Occupancy before acquiring space for their office. This application can be filled out online and must be approved by the government before an office space can be leased. You can view the full requirements online.
If you run your LLC out of your D.C. home (regardless of whether you own or rent), you’ll need a Home Occupation Permit (“HOP”). Follow the instructions on the site for applying. These permits are only for residentially zoned buildings.
While this number covers your LLC’s initial paperwork and setup, there are a few things it does not take into consideration, like your time and effort spent finding the correct forms, filing them, and handling items on your own, like getting an Operating Agreement. It also doesn’t include the ongoing cost of filing a biennial report, which costs $300 to file.
LLC business formation packages from ZenBusiness include the basic setup to help your company get up and running. In this package, ZenBusiness will provide registered agent services, help complete and file all paperwork, and even supply an Operating Agreement template.
We also have other services to help, such as applying for an EIN for your business and helping your LLC stay compliant with the government.
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 state and let you know when your LLC becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low price.
When starting a business, there are different types of companies you can choose from. Many small businesses opt to form an LLC because of the flexibility this business type offers. An LLC makes it easy to keep your business assets and liabilities separate from personal accounts. This type of company also offers many tax benefits and protections. Lastly, forming an LLC is relatively easy and can be done quickly, even by first-time businesses.
Here are the primary reasons you should choose to set up an LLC in the District of Columbia:
Separation of your LLC’s business finances and liabilities from all members’ personal finances and debts.
Exemption from double taxation. With an LLC, you’ll only be required to pay taxes on the business’s profits on your personal taxes, rather than being taxed at both the business and personal levels.
Flexibility to structure and manage your LLC how you choose, offering better adaptability for small businesses.
Very few reporting requirements compared to corporations.
Would you like to learn more about the LLC business structure? Get the full scoop in our comprehensive guide on LLCs.
As mentioned above, forming an LLC has many tax benefits, such as exemption from double taxation. However, you’ll want to learn how your LLC will be taxed in D.C. and what decisions you’ll need to make to keep your company tax compliant.
Although tax rules for LLCs are pretty straightforward, many LLCs opt to partner with a trusted accountant or tax specialist to ensure they’re following all tax laws required in the District of Columbia.
We’ll walk you through a few federal and D.C.-specific tax requirements for LLCs:
All LLCs formed in the District of Columbia must register with the D.C. Office of Tax and Revenue, which is also a prerequisite for getting the mandatory Basic Business License. This must be done online.
LLCs with a gross income of more than $12,000 will be expected to pay a franchise tax. This tax is calculated at a flat rate, but there is a minimum $250 franchise tax. You’ll have to pay this tax to the Office of Tax and Revenue.
You might opt to be taxed as a corporation. If you do, you’ll be required to fill out and submit an 8832 tax form as a C corporation and Form 2553 as an S corporation. Each year, you’ll be required to file your D.C. and federal business tax return by detailing all of your business investments, profits, losses, expenses, and employee wages. Your personal income will be detailed separately on your individual tax return.
You’ll also be responsible for making estimated quarterly tax payments each year. Doing this will help you avoid tax penalties at the end of the year. You can pay your D.C. and federal taxes online. In addition, if you have employees, you’ll need to set up withholding accounts to collect federal, D.C., Social Security, and Medicare taxes from their wages. You’ll be responsible for submitting these withholdings to the IRS. You can do this by setting up a wage withholding account online via the Office of Tax and Revenue.
Finally, if your LLC sells items or services that warrant sales tax, you’ll want to set up a sales tax account via the Office of Tax and Revenue by registering for a MyTax.DC.gov account.
The processing time for your LLC will vary depending on how your Articles of Organization are filed. If you apply online, expect your request to take anywhere from five to seven business days. If you file via mail, it can take up to three weeks. However, you can request expedited processing for additional fees to speed up the process to 24 to 48 hours.
While there are many forms you will need to file with the District of Columbia, when setting up your LLC, you do not need to file your Operating Agreement. This agreement will help detail how your LLC is run and managed but does not have to be provided to the government since it is not required by law.
Before deciding how your LLC should be taxed, it’s important to weigh your options.
Most LLC owners opt to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires owners to pay taxes on their percentage of the profits on their personal tax returns. The company itself is not taxed. This avoids the “double taxation” that corporate shareholders pay, in which profits are taxed both at the business level and the personal level.
For certain LLCs, it may make more sense to be taxed as a corporation. To find out more about the differences, check out our guide to filing taxes as a corporation.
We understand that deciding on a tax structure can be confusing. We recommend reaching out to a business accountant or tax specialist if you have any questions, so you can rest assured that your taxes are structured correctly for your business.
Some states permit what is called a Series LLC. A Series LLC refers to one or more LLCs that are nested under a parent LLC. This business structure can be appealing to many investors or entrepreneurs. In the District of Columbia, you’re allowed to form a Series LLC.
Before doing business in the District of Columbia, all LLCs must have a Basic Business License (BBL). There are several prerequisites for getting a BBL, including having your Articles of Organization approved, registration with the Office of Tax and Revenue, an EIN, and either a Certificate of Occupancy or Home Occupation Permit. You can apply in person, by mail, or online. The fees will depend on what category your business falls into.
In addition to the BBL, your LLC may need other federal, local, or industry-specific licenses and permits, so you’ll have to research your business’s needs. The DCRA also has a page with information on licensing in D.C.
The insurance your business will need depends on a variety of factors, such as whether you have employees or have company vehicles. D.C. requires your business to have workers’ compensation insurance if you have at least one employee. For more on what types of insurance your company may need, visit the District of Columbia Department of Insurance, Securities and Banking.
A couple of terms you may have come across are “foreign” and “domestic” LLCs. A foreign LLC is a company that was created outside of the District of Columbia that carries out business and services in the D.C. territory.
A domestic LLC is one that was formed in the District of Columbia and carries out business and services in the D.C. area.
It’s important to always register your LLC in the state or territory where you intend to conduct business.
Over time, your operation might change. You may have new members join, decide to switch your registered agent, or adopt a new business name. Whenever there’s a substantial change to your business, you’ll need to file an amendment with the District of Columbia government.
Follow the below steps for each change you need to report:
Change your registered agent’s information
To update your registered agent’s address or remove and add a new registered agent, you’ll need to fill out a Certificate of Amendment.
This will allow you to update your registered agent’s name and/or address.
You’ll be required to pay $50 for each amendment.
Change your LLC name
To update your LLC name, you’ll need to register a new company name by filling out the Name Registration and Renewal form. Be sure you follow all the directions in step one of this guide to ensure your new name is available.
You’ll be required to pay $200 for this name change.
Change your registered agent’s information
To update your LLC’s member list, you’ll need to fill out a Certificate of Amendment.
This will allow you to update all member names and information.
You’ll be required to pay $220 for each amendment.
To avoid substantial fees, try to make all updates at one time, so you’re only amending your Articles of Organization once.
In addition to amending your documents with the District of Columbia government, you should also update your Operating Agreement to reflect the new changes.
Your biennial report is due every other calendar year by April 1. This form asks for the name of your LLC, the state or territory where it was formed, your principal operating address, your registered agent’s name and address, a brief statement of business conducted in the past two years, details on all members, and your signature.
You might find that you need to dissolve your LLC. Whether you’re forming a new business or closing your doors, to end your LLC, follow the below steps:
First, you’ll need to transfer or close any LLC financial accounts. Always do this first because once your LLC is dissolved, it can be difficult to access these accounts.
Reach out to the District of Columbia Office of Tax and Revenue to determine if there are any steps you need to take to officially dissolve your LLC. Your accountant can also help with this process.
Lastly, you’ll need to file your Statement of Dissolution with the District of Columbia government. This form disbands the company you initially formed when filing your Articles of Organization. You’ll need to pay a $220 fee when dissolving your LLC. You can file and pay online or through the mail.
Thanks for reading this LLC guide. We hope you found all the answers you were looking for about successfully forming an LLC in the District of Columbia area. While we’re confident that you can navigate through this process on your own, many companies partner with business consultants during the setup process.
ZenBusiness can work with your District of Columbia LLC to streamline the setup process and make sure your company remains compliant with all local and federal laws. Get in touch today to find out how we can help your LLC get started.
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