Washington, D.C., is consistently recognized as one of the best places to start a small business in the U.S. In fact, there are currently more than 75,500 small businesses in the District of Columbia, making up 98.1% of businesses in the area. D.C. also saw a 25% rise in women opening businesses in 2023 compared to the previous year.
Moreover, D.C. has the nation's top retail market and is a favorable destination for entrepreneurs to start a business because of the District's access to global markets, policymakers, influential organizations, and think tanks.
Because the nation's capital is such an attractive place for starting a business, let's discuss how to form a limited liability company in D.C.
How to form a District of Columbia LLC in 6 steps
Follow this step-by-step guide when you're ready to form your limited liability company in the District of Columbia.
1. Choose your business name
The first step in forming a Washington, D.C. LLC involves selecting an appropriate and unique business name. However, the name must comply with the District of Columbia's naming rules. The following are a few examples of naming requirements:
- Your business name must include the words “limited liability company,” “limited company,” “L.L.C.,” “LLC,” “L.C.,” or “LC.”
- Your LLC name cannot include words like "bank," "banking," "credit union," or "insurance" without prior approval and permits from relevant regulatory agencies.
- Your name cannot be deceptively similar to the name of a government agency or department.
Furthermore, your D.C. LLC cannot share a name with another business operating in the District, so it's essential to check the name's availability through D.C.'s CorpOnline Portal. You can create an account and use the Corporations Division's Business Entity Search tool for free on the District of Columbia Department of Consumer and Regulatory Affairs (DCRA) website to browse existing business names.
Now, if you've selected a compliant business name for your limited liability company but you're not ready to register your business, you can register your LLC or reserve the name. To reserve your business name for up to 120 days, simply submit a Name Reservation Registration & Transfer Form GN-3 with the DLCP and pay the $50 filing fee.
2. Appoint a registered agent
Next, you must appoint a registered agent for your LLC in D.C. A registered agent is an individual or organization responsible for overseeing the official correspondence between your LLC and the government. For example, a registered agent will receive legal documents, such as tax forms, on behalf of your LLC.
Your registered agent must meet the following criteria:
- They must have a physical street address in the District of Columbia.
- Their address cannot be a P.O. Box.
- They must be available during normal business hours.
You can be your own registered agent, select someone you already know, or hire a registered agent service. At LegalZoom, we offer registered agent services starting at $249 per year.
3. File articles of organization
Every D.C. limited liability company must file articles of organization with the Department of Licensing and Consumer Protection (DLCP) for a domestic limited liability company. This document is what officially establishes your business entity in the District.
You can submit the articles of organization form online or mail it in, and there is a one-time $99 filing fee.
When filling out the form, you'll provide some basic information:
- Your LLC name
- The street address of your initial principal office
- The name and street address of your LLC's registered agent
- The names and street addresses of your LLC's members or managers
- The name and street address of your LLC’s organizer
4. Create an operating agreement
Although the District of Columbia doesn't require LLC owners to create an operating agreement, it's a recommended business practice. After all, an operating agreement is a document that describes how your LLC conducts business. It should establish your LLC's business structure, management, and operating procedures. You can create the operating agreement yourself or rely on an online LLC operating agreement template. But hiring an attorney to help you prepare for the growth of your business and potential legal issues is recommended.
Your operating agreement should address the following information:
- Member ownership structure
- Management rules
- Allocation of profits and losses
- Voting rights and decision-making guidelines
- Dissolution instructions
- Ownership transition instructions
While you don't need to file it with the District, it's important to keep a copy of this document on hand. You may need it for other steps in the D.C. LLC registration process, like when opening a business bank account.
5. Obtain an EIN and open a business bank account
Once you've established your District of Columbia LLC, it's time to obtain an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) for tax purposes. Multiple-member LLCs need EINs so their businesses can be taxed as separate entities.
In addition to needing an EIN for filing taxes, you will need an EIN to hire employees and may need it to open a business bank account, too.
To acquire an EIN for your D.C. LLC, you can submit Form SS-4 with the IRS online, by mail, or by fax—there is no filing fee.
After obtaining your EIN, you can use this number to open your LLC's business bank account. After all, you're legally required to separate your personal finances from your business finances, so you must open a separate account to manage your business funds.
6. Register for taxes and business licenses
The next step involves registering with the Office of Tax and Revenue (OTR) via the MyTax.DC portal. Once you've submitted Form FR-500, which is free, you'll receive a Notice of Business Tax Registration with a notice number. You'll use this notice number when applying for your business licenses in the District of Columbia.
Every LLC needs a D.C. business license to operate in the District. The most common one is the Basic Business License (BBL). You can apply for a BBL with the DCRA through the My D.C. Business Center portal.
That said, depending on the nature of your business, you may need to obtain additional federal or local licenses and permits, as well as professional licenses for specific occupations. For instance, if you're conducting business outside of your home in the District of Columbia, you may need to file for a Home Occupation Permit (HOP).
It's also important to note that there are filing fees associated with business license and permit registration, and the cost will vary depending on your business operations.
What to do after forming your LLC in D.C.
Once you've completed all the D.C. LLC formation requirements, there are a few more actions you can take to finalize your business.
Register a domain name
Selecting a domain name that matches your business name can help you establish an online presence. After all, your domain name is what consumers will use to navigate to your business website, so it's important that it's the same as your business name to avoid confusion.
Obtain a Certificate of Good Standing
Although it's not required, a Certificate of Good Standing, also called a Certificate of Existence, proves that your LLC is a registered entity and authorized to conduct business in the District of Columbia. You can request a certificate from the Office of the Chief Financial Officer.
Consider a foreign LLC
If you plan to expand your business outside of the District of Columbia, you may need to apply for a foreign limited liability company to operate in other states. To do so, you can file a Foreign Registration Statement (Form FN-1) with the DLCP. The filing fee is $50.
Familiarize yourself with tax laws
Let's face it, filing your taxes can be confusing, especially when it comes to learning the ins and outs of LLC tax laws. If you're unclear on what you owe or how to file, consider meeting with a professional tax advisor for help navigating your taxes.
Biennial filing requirements for District of Columbia LLCs
Every limited liability company in the District of Columbia must file a biennial report with the District of Columbia Corporations Division. This report includes basic information about your D.C. LLC, such as your LLC's name and address, along with the contact information of your LLC's members, managers, and registered agent.
You must submit a biennial report by April 1, following the year of your LLC formation, and then every two years after filing that initial report. You can submit the Form BRA-25 online, by mail, or in person, and the filing fee is $300—late fees do apply.
The cost of forming an LLC in Washington, D.C.
So, how much does it cost to start an LLC in D.C.? The total cost of forming your LLC in D.C. will depend on the kind of business you conduct and which actions you take, as some of the recommendations on this list are optional, such as registering for a Certificate of Good Standing or a foreign LLC.
That said, the following are some examples of associated fees.
- Articles of organization fee: $99
- Biennial report fee: $300
- Name reservation fee: $50
- Basic business license fee: varies
- Federal license, local permit, and operating license fees: varies
- Registered agent services fees: varies
- Certificate of Good Standing fee: $50
- Foreign limited liability company registration fee: $50
At a minimum, it costs $99 upfront to form an LLC in D.C. Additional services will increase your cost, but may be worth it in the end to prevent errors or noncompliance.
How to start your Washington, D.C., LLC with LegalZoom
At LegalZoom, we make it easy for you to form an LLC in the District of Columbia. Our services will help guide you through the entire process, from selecting your business name and drafting your articles of organization to writing your operating agreement and obtaining your EIN. We even offer consultations with business attorneys.
Start an LLC in Any State
FAQs
Do I need a business license for my Washington, D.C., LLC?
Yes, all businesses, including LLCs, need to obtain business licenses to operate in the District of Columbia. In most cases, a basic business license will suffice, but your LLC may need additional licenses and permits depending on your business activities.
How long does it take to form an LLC in D.C.?
It depends on the method you used for filing your articles of organization. If you file online, you usually receive approval within five business days, but if you apply by mail, it will take four to six weeks. To speed up the process, you can pay the expedited fees and form your LLC within the same day.
For a professional limited liability company (PLLC), this process may take significantly longer.
How do I correct filing errors in Washington, D.C.?
If you need to correct a filing error on your articles of organization, you can submit Form DLC-3, Articles for Correction for Domestic Limited Liability Company via the Department of Consumer and Regulatory Affairs. The filing fee is $220.
How do I dissolve an LLC in D.C.?
You can dissolve your District of Columbia LLC by filing Form DL-8, Statement of Dissolution for Domestic Limited Liability Company, with the Department of Licensing and Consumer Protection. The filing fee is $220.
How are LLCs taxed in the District of Columbia?
In most cases, Washington D.C. LLCs do not pay corporate taxes. Instead, most LLCs pay the annual franchise tax of 8.25%.
Does my LLC need to collect taxes if it sells goods or services in the District of Columbia?
Yes, if you sell taxable goods or services in D.C., you'll need to apply for a sales tax permit so that you can collect the appropriate sales tax and pay it to the District of Columbia.
Rudri Bhatt Patel contributed to this article.
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