Starting a company in the District of Columbia
A Washington DC LLC in the District of Columbia is a hybrid business arrangement that protects the owner from personal liability in case of a lawsuit. If your DC LLC gets charged, your assets, such as your home, car, and bank accounts, will be safe.
You can run a business with your District of Washington DC LLC or use it to buy things like real estate and cars.
A. Name of the District of Columbia L.L.C.
Before you file the Articles of Organization for your District of Columbia L.L.C., check the District’s database to see if the name you want to use is free.
Your Washington DC LLC name must be different and unique from all the other businesses already listed in the District.
L.L.C. Designator: Section 29–103.02 of the D.C. Code says that the name of your L.L.C. must end with a proper designator (also called a “suffix”). These are the only ones that can be used:
* Ltd. Co.
* Ltd. Company
* The “Limited Co.
* “Limited Liability”
* “Company with limited liability”
Your District of Columbia L.L.C. name can’t sound like it belongs to a different type of legal entity:
* “Not for profit.”
* Corporation Not for Profit
Few people start an L.L.C. in a hurry and then want to change the name of their DC LLC later on. You can change the name of your L.L.C. later (by filing an amendment), but it can be a huge hassle. You’ll need to tell the I.R.S., the bank, and the Office of Tax & Revenue that you’re changing the name of your L.L.C. So that you don’t have to change the name of your L.L.C. later; we suggest reading about how to come up with a good business name.
B. Registered Agent for District of Columbia L.L.C.
In the Articles of Organization for your L.L.C., you must list a District of Columbia Registered Agent. This is a requirement of the DLCP.
A District of Columbia Registered Agent is a person or company that agrees to receive notices, legal mail, and court papers (called “Service of Process”) if your L.L.C. is sued or involved in a court case.
Your District of Columbia Registered Agent must have an actual street address in the District (P.O. Boxes are not allowed) where Service of Process and other documents can be sent.
Who can be your D.C. Registered Agent for your L.L.C.?
You can do three things:
The first choice is to be your Registered Agent.
The second choice is to have a friend or family member act as the Registered Agent for your L.L.C.
Third, you can use your home to be public or don’t have an address in the District.
C. The Articles of Organization for a District of Columbia L.L.C.
File the District of Columbia Articles of Organization (Form DLC-1) to start your L.L.C.
The one-time filing fee for an L.L.C. in the District of Columbia is $99.
How to file: In the District of Columbia, you can set up an L.L.C. online or by mail.
Our advice is to file online because the process is easier, and the acceptance time is much shorter.
First, make an Access DC login. Then, file your L.L.C. online. Then go to CorpOnline and click the “Register Organization” button.
Time to get approved: If you file online, your District of Columbia L.L.C. will be approved in 5 business days. If you send in your application by mail, it will take anywhere from two to four weeks, plus the time it takes to get there.
District of Columbia L.L.C. approval: Two L.L.C. approval papers will be sent to you by email from the DLCP. You’ll get your accepted and stamped. Your CorpOnline account will also have both of these files.
D. Operating Agreement for the District of Columbia LLC
A Washington DC LLC. Operating Agreement is a written deal between the L.L.C. Members that says who owns the Washington DC LLC and how much of it they own. The Operating Agreement for your Washington DC LLC will also include information about how your Washington DC LLC. is run, how gains are split, how taxes are paid, and more.
Both Single-Member L.L.C.s and Multi-Member L.L.C.s in the District should have an Operating Agreement.
L.L.C. helps show that the company is a different legal entity from the L.L.C. owners. This helps keep your L.L.C.’s defense of your personal assets in place and is a great thing to have if you ever end up in court.
Internal Document: An L.L.C. Operating Agreement is an “internal document,” which means you don’t have to give a copy to the DLCP, the Office of Tax and Revenue, the I.R.S., L.L.C. business records and give a copy to any other L.L.C. Members, if necessary.
E. Fill out an E.I.N. application for your DC LLC
After your DC LLC is accepted by the DLCP, you will need to get an E.I.N. (Employer Identification Number) from the IRS.
An E.I.N. is also called an E.I.N. Number, a Federal Employer Identification Number, a Federal Tax ID Number, or a Federal Employer Identification Number. All of them have the same meaning.
You can think of the E.I.N. Number for your District of Columbia L.L.C. as its “social security number.” It helps the I.R.S. figure out who your L.L.C. is for tax and filing needs.
You will also need the E.I.N. for your District of Columbia L.L.C. when you open a bank account, register your business with the Office of Tax and Revenue, and, if you have employees, pay them.
How is a DC LLC taxed? The I.R.S. doesn’t have a specific tax classification for L.L.C.s, so a DC LLC can be taxed in 4 different ways. Two of these are automatic (they happen when you get your L.L.C.’s E.I.N.), and the other two require a special election (you have to fill out a form after you get your L.L.C.’s E.I.N.). Before you ask for an E.I.N. for your L.L.C., you should read about how it is taxed.
Wait for your L.L.C. to be approved. Don’t apply for an E.I.N. until the DLCP has accepted your District of Columbia L.L.C.
An E.I.N. costs nothing ($0): The I.R.S. will give your L.L.C. a free E.I.N..
When you ask for an E.I.N. for your DC LLC, this person will be the “contact person” for the I.R.S. If you have a Single-Member L.L.C., you will be the Responsible Party. If you have an L.L.C. with more than one Member, any member of the L.L.C. can be the Responsible Party. See E.I.N. Responsible Party for L.L.C. for more information.
How to get an E.I.N.: Your District of Columbia L.L.C. can get an E.I.N. in three ways:
- You can apply for an E.I.N. online if you have an SSN or an ITIN.
- If you try to get an E.I.N. online and get an error message, you’ll have to use Form SS-4 to get an E.I.N. instead.
- You can still get an E.I.N. for your L.L.C. even if you don’t have an SSN or ITIN. Here’s how: how to get an E.I.N. without an SSN or ITIN
F. Registering for taxes with the Office of Tax and Revenue
All Limited Liability Companies in the District must sign up for DC LLC Tax.
After the DLCP approves your District of Columbia L.L.C. and you get your E.I.N. Number from the I.R.S., you must register your L.L.C. with the Office of Tax & Revenue (O.T.R.) for taxes.
Fee: There is no fee to file your taxes.
File online through the O.T.R.’s website, which is called MyTaxDC, to sign up.
On the FR-500 tax registration form, you’ll be asked a number of questions about your DC LLC. Once you send it in, your DC LLC will be listed for the taxes it needs to pay, and you’ll be told when those taxes are due.
Approval and L.L.C. Notice Number: After you send in the FR-500, you’ll get a letter in the mail called “Notice of Business Tax Registration” within 3 to 5 working days. Your L.L.C.’s Notice Number will be in the upper-right area of your letter. You’ll need this number to apply for your Basic Business License, which will be covered in the next few steps.
G. Home Occupation Permit or Certificate of Occupancy
In the District of Columbia, all L.L.C.s need either a Certificate of Occupancy or a Home Occupation Permit to do business.
Certificate of Occupancy: This is used for businesses. Called “C of O” at times. Needed if you own or plan to build office or business space. If you rent an office or business space, you might be able to use the building’s current Certificate of Occupancy. Check with the owner or those in charge.
Home Occupation Permit: This is used for homes. Called “H.O.P.” sometimes. If you work from home, you need this. Whether you own or rent the house, you need a house Occupation Permit.
The cost is $122 for a Home Occupation Permit. Most Certificates of Occupancy cost $75, but it could be more based on how big the building is.
Certificate of Occupancy and Home Occupation Permit Applications
How to apply: To get a Home Occupation Permit, you can apply online. Most Certificates of Occupancy applications are sent to the Department of Buildings by filling out all the paperwork and emailing them.
You don’t have a physical spot in D.C. or work from home in D.C.
You need either a Certificate of Occupancy or a Home Occupation Permit if your L.L.C. is in the District. For the next step, which is getting a Basic Business License, you will need the Certificate or Permit Number.
H. License to do business
All L.L.C.s in the District of Columbia need a Basic Business License (BBL) as well as a Certificate of Occupancy or Home Occupation Permit to be able to do business.
Before you apply, make sure you have your L.L.C.’s Certificate of Organization, your L.L.C.’s E.I.N. Number, your Notice of Business Tax Registration letter, and your Certificate of Occupancy or Home Occupation Permit. When you apply for your BBL, you will need all of this information.
Costs: There is no set price for a Basic Business License; it varies on the kind of business. Every two years, a BBL will cost between $200 and $500 on average.
General Business License (GBL): If your business doesn’t fit into any of the other endorsement categories, Every two years, a GBL costs $325.
How to apply: We suggest that you apply for a BBL online or in person.
Use the My DC Business Center to apply online. You will need a “Access DC” login.
Visit the DLCP Business License Center at 1100 4th Street S.W., 2nd Floor, Washington, DC 20024, to fill out an application in person. There are machines you can use to fill out updates every two years. (Except if you buy a 4-year ticket, in which case you have to renew it every four years.)
I. District of Columbia L.L.C. Report Every Two Years
Your new business needs to file a DC LLC Biennial Report every two years. The Biennial Report is needed for all L.L.C.s in the District, and it shows that your L.L.C. is following the rules and is in good standing.
Cost: Every two years, the L.L.C. Biennial Report costs $300.
The Biennial Report is awaited
on April 1 every two years.
Your L.L.C.’s first Biennial Report is due two years after it was established. So, if your L.L.C. was accepted on June 10, 2023, your first L.L.C. Biennial Report is due on April 1, 2024.
If your Biennial Report is late, you will have to pay a $100 fine. The DLCP will shut down your L.L.C. if you continue to ignore the rule.
Reminders: The DLCP will send a friendly email to the email address of your L.L.C.’s Registered Agent.
J. Taxes in the District of Columbia
DC LLC Taxes are different for every small business, but we can give you an idea of what you need to do.
Income tax: You must pay income tax to both the federal government (through the Internal Revenue Service) and the District of Columbia (through the Office of Tax & Revenue).
Federal income taxes: L.L.C.s are “pass-through” companies by default, which means that the L.L.C. doesn’t pay its own taxes. Alternatively, profits and losses “flow through” to the owners, who are responsible for filing and paying federal taxes. Only if you choose to have your L.L.C. treated as a Corporation is this not true.
(Note: A “pass-through” company is also an L.L.C. that is taxed as an S-Corporation.)
Since there is no “L.L.C. tax classification” at the I.R.S., L.L.C.s are charged based on how many Members they have.
Single-Member L.L.C.: This is a type of L.L.C. that will be treated like a sole proprietorship. Most will put their L.L.C.’s income on a Schedule C, which is part of their personal 1040 federal tax report.
Multi-Member L.L.C.: This will be treated as a Partnership, even though it is an L.L.C. The L.L.C. files a Form 1065, which is an educational return, but it doesn’t pay taxes. Instead, the L.L.C. gives each Member a K-1 that shows their share of the profits. Each Member then includes this income on their own 1040 federal tax form.
D.C. franchise tax returns: At the federal level, L.L.C.s are “pass-through” companies, but not at the District level. L.L.C.s are instead charged a franchise tax. You could think of this as a tax for the right to do business in the District. At the moment, an L.L.C.’s net income is taxed at 8.25%.
Unincorporated Business Franchise Tax (Form D-30): All District of Columbia L.L.C.s with more than $12,000 in gross sales that are treated as either a Sole Proprietorship or a Partnership must file this return.
Corporate Franchise Tax (Form D-20): All L.L.C.s in the District of Columbia that are taxed as C-Corporations or S-Corporations must file this report.
Minimum franchise tax: No matter how much your L.L.C. makes in net income, the minimum franchise tax is $250. However, this amount could be higher based on your L.L.C.’s gross receipts, net income, and taxable income.
Estimated taxes (D-20ES or D-30ES): No matter how your DC LLC is taxed, you must file quarterly estimated taxes and payment slips if you think it will owe the District more than $1,000 in taxes. L.L.C.s that are taxed as sole proprietorships or partnerships will file Form D-30ES, while L.L.C.s that are taxed as C-Corporations or S-Corporations will file Form D20-ES.
Personal Property Tax (FP-31): All L.L.C.s in the District of Columbia, no matter how they are taxed, must file a form called the Personal Property Tax Return. This form is just for information. Only L.L.C.s with personal property worth $225,000 or more will have to pay a tax.
Sales tax: If your L.L.C. sells retail or physical things, In DC, some companies that provide services must also file sales tax. TaxJar is a good choice if you need help with your sales tax returns.
Other taxes: What’s been said so far is a general review, and it doesn’t cover all the taxes you might have to pay. Taxes can be very different and depend on a lot of things, like how your L.L.C. is taxed, where it’s located, who the owners are if you have workers, and what business you’re in. Other taxes in D.C. include but are not limited to, ballpark taxes, payroll taxes, jobless taxes, and industry-specific taxes.
Accountant: If you live in the District of Columbia, you should work with an accountant to make sure your federal and District taxes are done right.
K. Bank Account for the District of Columbia L.L.C.
Once the I.R.S. has given your DC LLC an E.I.N. number, you can open a bank account for your business.
It’s best to have a business checking account for your District of Columbia L.L.C. It’s called “commingling of assets” to use your personal bank account for your L.L.C., and if you end up in court, this could make you personally liable for business debts.
Having a separate business bank account for your L.L.C. in the District of Columbia also makes it easier to keep records for tax and accounting reasons.
Since each bank in the District has its own rules and laws, we suggest calling around to find out the following:
* minimum starting deposit
* minimum balance conditions
* if there are any monthly fees for care
Documents needed for a DC LLC: If you want to start a business bank account for your DC LLC, you’ll likely need the following:
* Articles of Organization (approved and stamped)
* Organization Certificate
* Letter from the I.R.S. confirming your E.I.N.
* Letter of Tax Registration for Business
* Home Occupation Permit or Certificate of Occupancy
* License for Running a Business
* “Photo ID” means either a driver’s license or a visa.
* Operating Agreement (it might not be needed, but it’s a good idea to bring it anyway)
L.L.C. Members: If you have a Multi-Member DC LLC, all members who want to be on the bank account should be there when the account is opened.
Non-U.S. residents: You can still open a U.S. business bank account if you are not a U.S. resident but have set up an L.L.C. in the District of Columbia. You can find out more here: starting an L.L.C. bank account for people who don’t live in the U.S.
When you open the account, the bank will give you a debit card.
You can also get a credit card for your business to earn points, miles, and other benefits.
L. D.C. Business Phone Number
Get a different business phone number for your District of Columbia L.L.C. instead of giving out your cell phone number or home phone number.
Phone.com is a good place to get a phone number. They have the best deals at the best prices, and their customer service is great.
You can get a local D.C. phone number for your business, or you can get a “1-800” number. Phone.com lets you set up call forwarding to any number you want, make pre-recorded messages, and get your voicemails sent right to your email.
Getting a different phone number for your District of Columbia L.L.C. is also a good idea if you want to keep your real phone number off of those annoying “public record” websites.
DLCP Departments and Agencies
(Home Occupancy Permit or Certificate of Occupancy)
Division of Business Licenses
Website: DLCP: Get a Business License
Center for Small Business Help
(Advice and Help for Small Businesses in General)
The Tax and Revenue Office
(D.C. tax registration and payment)