The White House. The Capitol Buildings. Politics and museums. Washington DC is known for many things including The Mall and also as a place where businesses of all shapes and sizes set up and tap into the state’s strong economy and Foreign Direct Investment (FDI).
An LLC formation in Washington DC is no more difficult than in the rest of the country, even though this area is a territory and not a state. Below we’ve detailed all of the steps you’ll need to take as well as pricing and documentation required.
Summary
A limited liability corporation (LLC) assists small enterprises by providing liability protection and tax advantages. If an LLC is the perfect company structure for you, take these steps to form one in Washington DC.
You have the option of forming the LLC on your own or hiring a business creation service.
1. Give Your DC LLC a Name
It is essential that you be aware that the name of your company must adhere to all of the federal and state laws and regulations. The District of Columbia mandates the following for the name of your LLC:
- Includes one of the descriptors “limited liability company,” “limited company,” “LLC,” or “L.L.C.”
- Does not include any prohibited terms or phrases without prior clearance (words such as bank, attorney, and university are common examples of restricted words and phrases).
- Is distinct from any other business or organization that has a trade name registered in DC
You may see the whole list of name standards for Washington, DC right here. The next step is to check with the Department of Consumer and Regulatory Affairs using their DC LLC name search tool to see whether the name you want to use is already taken.
When you submit your articles of organization to the Department of Consumer and Regulatory Affairs, you will be able to register your company name if it is not already used and if it conforms to the requirements set out in the rules.
2. Choose a DC Registered Agent
A registered agent in the state is required of every limited liability company operating in Washington, District of Columbia. If the limited liability company (LLC) is taken to court, this refers to a person or company that has agreed to accept service of process on its behalf.
The Registered Agent could either be a resident of Washington, District of Columbia, or a business entity that is permitted to conduct operations in the district. It is required that the Registered Agent have a real street address in the District of Columbia.
The role of a Registered Agent
A Registered Agent receives tax forms, legal paperwork, lawsuit notices, and government communication on your business’s behalf. Consider the role of your registered agent as that of the point of contact for your company with the state.
Eligibility criteria for a Registered Agent
A Registered Agent must either be an individual who lives in Washington, District of Columbia on a permanent basis or a company that is permitted to carry out business within the state of Washington, District of Columbia, like a Registered Agent service. You have the option of selecting anybody who works for the organization, including yourself.
3. Submit the Articles of Organization for the District of Columbia
The Cert of Organization is really a paper that lays forth fundamental information about your limited liability company and is responsible for formally establishing it. This document, which in certain states is referred to as a Certificate of Organization, is necessary for the formal registration of your company with the state, and it is critical that all of the information be accurate.
What should be included in the Articles of Organization for your company?
When completing the Articles of Organization for your Washington, DC LLC, you are required to give the following information:
- That should be the name of your limited liability company.
- The major location of your company’s operations.
- The name and address of the registered agent who handles your organization’s paperwork.
- The names and addresses of those who serve as members or administrators of your organization (optional)
- Various bits and pieces of knowledge. Include in this section any extra information on your limited liability company that the District of Columbia government may need, such as whether or not it is a part of a Series LLC.
- The names and addresses of those involved. Include the names and addresses of any members of the DC limited liability corporation, as well as any other parties that have a financial stake in your business, in this section.
- Signature, along with the name and address of the organizer. Before handing in the completed form, you will need to sign it and date it.
Submission of Your Organization’s Articles of Incorporation
Now is the moment to formally establish your limited liability company (LLC) by submitting your articles of organization to the District of Columbia Department of Consumer and Regulatory Affairs.
You have the option of submitting your paperwork to the Department of Licensing and Consumer Protection (DLCP) either electronically via their website or by filling out a printed copy of Form DLC-1 and either mailing it in or delivering it in person. The charge to submit paperwork is $220.
Make a online account
In addition, the DLCP provides services over the internet. You will be required to register for an account and submit the associated cost using a credit card in order to utilize the online portal. It is in your best interest to keep a record of your login information since it is possible that you may be able to utilize this account to submit applications for licenses and permits.
4. Obtain a Certificate From the Government of Your State
After the formation paperwork of the LLC has been submitted and authorized, the state will send you a certificate that proves the LLC’s official existence in response to a written request for a copy together with the appropriate amount of postage.
With this certificate, the limited liability company (LLC) will be able to get an Employer Identification Number (EIN), as well as business permits and a business bank account similar to Bluevine’s.
5. Draw up a Contract for Business Operations
Even while establishing a detailed LLC operating agreement is not a legally required step for founding a limited liability company in the District of Columbia, it is highly suggested for all new limited liability firms.
The following items should be included in the operating agreement:
- Describe the business structure of the limited liability company.
- Determine the specific duties and commitments that each member of the limited liability company (LLC) has
- Structure of your LLC.
Your limited liability company’s operations will be governed by the laws governing LLCs in the District of Columbia if you do not have an operating agreement. There is no need for an operating agreement to be included in the articles of organization that are submitted.
6. Obtain an EIN
A federal employer identification number, commonly known as a tax ID number, will be required of many limited liability companies (LLCs). An Employer Identification Number (EIN) is a nine-digit number that identifies your company to the Internal Revenue Service. You need an EIN in order to file federal employer taxes, open a bank account (in most situations), or recruit staff.
On the IRS site, which is accessible without charge, you may check to see whether you require an EIN and submit an application for one online. Single-member limited liability companies, which are an exemption to the rule that most firms are required to acquire an EIN, may instead use the owner’s Social Security number.
Business Licenses
Your LLC may require a Washington DC business license and a municipal business permit depending on its location and industry. For instance, if you sell things in the District of Columbia, you could be required to pay sales tax and hold a license to collect sales tax.
7. Filing Biennial Reports for your Business
You are required to submit a report for your limited liability company every two years to the District of Columbia. The first biannual report is due on April 1 of a calendar year that follows the year that your limited liability company was created.
After then, further statements are required on April 1 of every other calendar year, making them biannual reports. You have the option of filing your biennial report in person at the Business License Center or electronically on the DCRA website.
The filing cost is currently set at $300. There is a penalty of one hundred dollars for late reporting. In-person filing of reports results in an extra cost that covers accelerated processing.
Fees and next steps
Costs
To submit the Articles of Organization, there is a cost of $220 that must be paid to the District of Columbia Corporations Division. If you want to reserve the name of your limited liability company (LLC) before you submit the articles of organization, the fee to file an application for name reservation is $50.
Your limited liability company will be able to do business as soon as the state has validated the necessary papers.
If you have created a limited liability company (LLC) in another state, yet you wish to do business in the District of Columbia, you will need to register your out-of-state LLC in the District of Columbia. This kind of company is referred to as a Foreign LLC.
Next Steps
When you register a limited liability company (LLC), you establish a legal basis upon which to operate your firm. Companies should make it a priority to maintain their limited liability company in compliance with state regulations and in an active position on the state’s website.
Certificate of Occupancy
In addition, before securing space for their office, LLC owners in the District of Columbia are required to get a Certificate of Occupancy from the city.
First before office space may be rented, this application has to be completed and authorized by the government. The application can be submitted online. On the website of the DCRA, you can find the whole list of criteria.
Home Occupancy
If you conduct your limited liability company (LLC) out of your house in the District of Columbia, irrespective of if you own the property or rent it, you are required to get a home occupancy permit (also known as a “HOP”). When applying, make sure to follow the requirements on the DCRA website. These permits are reserved only for structures that are located in residentially designated areas.
DC franchise taxes
The District of Columbia additionally imposes a franchise tax on any and all limited liability companies that do not qualify for any other exemptions and have gross revenues of more than $12,000. The rate of the tax is 9.0% of any income that is taxable.
Taxable income is your LLC’s net income less a $5k exemption for unincorporated firms and a 30% wage allowance for owners.
Corporations having gross revenues in the District of Columbia of less than $1 million are subject to a minimum tax rate of $250, while companies with gross receipts in the District of Columbia of more than $1 million are subject to a minimum tax rate of $1,000.
Other actions
In addition, having a registered limited liability company enables you to perform the following:
- Obtain any permissions or licenses required to run your company, such as those issued by the health department, the zoning department, the department of home occupations, the department of professional licensing, and others. Some states need a seller’s permission to conduct sales
- Register your company with the department of revenue in your state.
- Create a bank account for your company.
- Create a credit card account for your company.
- Invest in insurance coverage for your company.
- Create a trademark to protect both your company’s name and its logo.
DIY LLC setup or hire a company formations firm?
To establish a limited liability company (LLC), you are not required by law to consult a lawyer. The majority of states enable the establishment of LLCs via the process of registering the business entity on the website of the secretary of state and with the Internal Revenue Service (IRS).
If you are not acquainted with the process of forming an LLC, your best bet may be to hire a professional LLC provider so that you can be certain that the creation will go smoothly and quickly.
When entrepreneurs start a new firm, they may save startup costs and save valuable time by using a professional agency that specializes in company forms. For $50 to $500, they can take care of things you might not have time to think about, like:
- Developing an operating agreement for an LLC that details your company’s who, what, when, where, why, and how, and putting it into writing (required in some states).
- Putting together articles of incorporation that identify the management of the LLC, the registration agent, and the date the company was formed.
- Taking up the role of registered agent for your firm.
- Keeping careful records in the event that there are investigations or litigation.
- Payment of filing fees and registration with the appropriate parties.
- Registering the name of your firm and ensuring that the name you choose for your limited liability company is accessible.
- Finishing up and turning in all of the necessary legal and formation documentation.
FAQs
How can I establish an LLC in DC?
In order to establish a limited liability company (LLC) in the District of Columbia (DC), you will be required to submit a document called the Articles of Organization to the Department of Consumer and Regulatory Affairs (DCRA).
What is the cost to form an LLC in the District of Columbia?
The cost of forming a limited liability company in the District of Columbia ranges from about $220 to $370, based on a variety of criteria including whether or not you wish to register your business name and the fact that you select expedited filing.
How long does it take to set up an LLC in DC?
An LLC in DC may take up to 15 days to incorporate, depending on how you submit with the Department of Consumer & Regulatory Affairs (DCRA).
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