A limited liability company (LLC) offers liability protection and tax advantages, among other benefits for small businesses.
LLC formation in the District of Columbia is easy. Just follow these eight steps and you'll be on your way.
1. Name Your District of Columbia LLC
You'll need to choose a name to include in your articles before you can register your LLC.
Names must comply with District of Columbia's naming requirements. The following are the most important requirements to keep in mind:
- Your business name must include the words Limited Liability Company, LLC, or L.L.C.
- Your name must be different from an existing business in the state. Searches can be conducted on the Secretary of State's website to determine if a particular business name is in use. For name availability in District of Columbia, check this link.
- The business name cannot contain words used to name a government agency (i.e. State Department, CIA, FBI, Treasury, etc.)
- Certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.
See a complete listing of District of Columbia's naming rules.
- URL availability. Even if you don't think you'll need a webpage, you probably will. At the very least, you should reserve the option of having one in the future by buying your domain name now. Before finalizing your LLC name, it's a good idea to check if the URL is available.
- Reserve your name. If you aren't ready to register your LLC, but are concerned your name might be taken by someone else, you can reserve it for a small fee. In The District of Columbia, names may be reserved for up to 120 days by paying the fee and submitting the proper form to the state authority.
2. Choose Your Registered Agent
The District of Columbia requires you to appoint a registered agent for your LLC.
A registered agent is the LLC's official contact. This is the person or entity who will receive legal documents, government correspondence, tax forms, as well as notice of lawsuits on the LLC's behalf.
A registered agent can be a person (including yourself or an employee of your LLC), or an entity that offers a registered agent service. They must meet the following criteria:
- Entities (or companies) must provide registered agent services.
- The agent must have an address in the District of Columbia.
- The agent must be on-site and available to accept documents during regular business hours.
3. Prepare and File Articles of Organization
The Articles of Organization is a document that officially establishes your LLC by laying out basic information about it.
Prepare Articles of Organization and file them with the District of Columbia Corporations Division to properly register your District of Columbia LLC. Though it sounds like a big job, that simply means filling out a relatively simple online form and submitting it. You can also send it by mail or submit in person.
To prepare your articles, you'll usually need the following information:
- Your LLC name.
- The street address of the LLC's principal office.
- The name and address of your registered agent.
- A reason why the LLC was formed. This can be a general statement.
- An LLC's duration, or time period over which the LLC will exist. In most cases LLC's are perpetual, meaning the duration is indefinite. A perpetual LLC can be dissolved voluntarily or involuntarily. If your LLC exists for a purpose that will end at a specified date, you will specify that date here.
- The effective date of the Articles (either upon filing or at a later date).
- Management structure: Will the LLC be managed by its members or managers?
- The person forming the LLC is required to sign the Articles.
Once you file your Articles, the secretary of state will review the filing. If the articles are approved, the LLC becomes a legal business entity.
4. Receive a Certificate From the State
Once your LLC is approved, the state will send a stamped and approved copy of your Articles of Organization as well as a Certificate of Organization with an official DC seal. If you filed your LLC application online, you'll be able to download these documents online.
This certificate will allow the LLC to obtain an Employer Identification Number (EIN), business licenses, and business bank account.
5. Create an Operating Agreement
An operating agreement is a document that outlines the way your LLC will conduct business.
District of Columbia doesn't require an operating agreement but it is an essential component of your business. Having a readily accessible, written operating agreement is helpful for a variety of reasons including settling disputes that may arise over financial agreements and other potential litigation. Without an agreement in place, the courts make determinations based on state law, not necessarily what is in the best interest of the LLC and its members.
The operating agreement can include, but is not limited to, the following:
- LLC's name and principal address
- Duration of the LLC
- Name and address of the registered agent
- Information about the Articles of Organization
- Purpose of the business
- Members and their contribution
- The way profits and losses will be divided
- Procedure for admitting new members, as well as outgoing members
- Management of the LLC
- Indemnification and liability clauses
6. Obtain a business license
To conduct business legally in the District of Columbia, you must acquire a business license. The type of license will be dependent on the business. In most cases, you will beed a Basic Business License. In many cases, you'll need a Basic Business License (BBL). For more information check the Basic Business License (BBL) on the District of Columbia's website.
7. Get an Employer Identification Number
The nine-digit Employer Identification Number (EIN) is assigned by the Internal Revenue Service to identify your LLC for taxes. You can obtain your EIN by mail or online through the IRS.
The purpose of an EIN is to assist with the following:
- File and manage taxes at the state and federal level
- Open a business bank account.
- Hire employees.
8. File Biennial Reports
An LLC in the District of Columbia must submit a report biannually with the Department of Consumer and Regulatory Affairs. It must include the following:
- LLC's name and the state or country where it was organized.
- LLC's name and address of registered agent.
- A brief statement of the LLC's business affairs conducted in the District of Columbia.
- LLC's principal office address.
- The names and business addresses of any LLC managers.
The initial biennial report must be filed by April 1 of the year following the calendar year the LLC was formed or registered to do business in the District of Columbia. Any subsequent biennial report must be filed by April 1 of each second calendar year.
Registering your LLC gives you a legal foundation to conduct business. Plan to keep your LLC compliant and in active status on the state's website.
This might include making quarterly tax payment. You also need to maintain a registered agent for your business.
A registered LLC also makes it possible for you to do the following:
- Obtain permits or licenses necessary to operate your business including health department permits, zoning permits, home occupation permits, professional licenses and more. Some states require a seller's permit to conduct sales.
- Register your business with the state's tax agency.
- Open a business bank account.
- Apply for a business credit card.
- Purchase insurance for your business.
- Protect your name and logo with a trademark.