Starting a District of Columbia LLC
A District of Columbia Limited Liability Company (LLC) is a hybrid business structure that offers personal liability protection in case of a lawsuit. In the event your DC LLC is sued, your personal assets (like your home, vehicles, and bank accounts) will be protected.
You can use your District of Columbia LLC to run a business or you can use your LLC to purchase assets, such as real estate and vehicles.
1. District of Columbia LLC Name
Before filing your District of Columbia LLC’s Articles of Organization with the Department of Licensing and Consumer Protection (DLCP), you’ll need to search the District’s database to make sure your desired DC LLC name is available for use.
Your DC LLC name must be unique and distinguishable when compared to all the existing businesses registered in the District.
LLC Designator: As per the DC Code section 29–103.02, your LLC name must end with a proper designator (aka suffix). The following are the only ones that are allowed:
- Ltd. Co.
- Ltd. Company
- Limited Co.
- Limited Company
- Limited Liability Company
Tip: If you’re not sure which designator to use, “LLC” is the most common. It’s also the easiest to recognize.
Your District of Columbia LLC name cannot include a designator that makes it sounds like a different type of legal entity:
- Non Profit
- Non Profit Corporation
Far too many people rush the LLC formation process and then later want to change their District of Columbia LLC name. While you can change your LLC name later (by filing an amendment), the process can be a major pain. You’ll need to change your LLC name with the IRS, the bank, and the Office of Tax & Revenue. For this reason, we recommend reading how to come up with a good business name so you don’t have to change your LLC name later.
2. District of Columbia LLC Registered Agent
The DLCP requires you to list a District of Columbia Registered Agent in your LLC’s Articles of Organization.
A District of Columbia Registered Agent is a person or company who agrees to receive notices, legal mail, and court documents (called Service of Process) in the event your LLC is sued or involved in a court case.
Your District of Columbia Registered Agent must have a physical street address located in the District (PO Boxes are not allowed) where Service of Process and other documents can be received.
Who can be your LLC’s District of Columbia Registered Agent?
You have 3 options:
Option #1 is for you to be your own Registered Agent.
Option #2 is for a friend or family member to be your LLC’s Registered Agent.
Option #3 is to hire a Registered Agent Service. Hiring a Registered Agent Service is a good idea if you want to keep your address off public records or if you don’t have an address in the District.
Registered Agent Service: If you want to hire a Registered Agent Service in the District of Columbia, we recommend Northwest Registered Agent ($125 per year).
Northwest has great customer service and has been in the business for over 20 years. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account. They’ll also let you use their office address throughout your LLC filing in order to keep your address off of public records.
Special offer: If you hire Northwest to form your LLC ($39 + state fee), they’ll include their Registered Agent service free for the 1st year.
3. District of Columbia LLC Articles of Organization
To start your LLC, you will file the District of Columbia Articles of Organization (Form DLC-1).
District of Columbia LLC filing fee: $99 (one-time fee)
Check out LLC Cost in District of Columbia for more info.
Method of filing: You can form an LLC in the District of Columbia online or by mail.
Our recommendation: We prefer the online filing as the approval time is much faster and the process is easier.
Approval time: Your District of Columbia LLC will be approved in 5 business days when you file online. If you file by mail, it will take 15 business days for approval.
Note: Filing times may take longer due to the current global situation and government delays. Please see how long does it take to get an LLC in the District of Columbia.
District of Columbia LLC approval: The DLCP will email you two LLC approval documents. You’ll receive your Articles of Organization (stamped and approved) as well as a Certificate of Organization. Both of these documents will also be in your CorpOnline account.
4. District of Columbia LLC Operating Agreement
A District of Columbia LLC Operating Agreement is a written contract among the LLC Members that spells out who owns the LLC and how much of the LLC they own. Your DC LLC’s Operating Agreement will also document how your LLC is managed, how profits are split, how taxes are paid, and more.
An Operating Agreement should be put in place for both Single-Member LLCs and Multi-Member LLCs located in the District.
Having an Operating Agreement for your District of Columbia LLC helps prove that the company is a separate legal entity from the LLC owners. This helps maintain the personal asset protection provided by your LLC and is very beneficial to have if you ever end up in court.
Internal Document: An LLC Operating Agreement is an “internal document“, meaning, you don’t have to send a copy to the DLCP, the Office of Tax & Revenue, the IRS, or any other government agency. You just need to keep a copy of the Operating Agreement with your LLC business records and give a copy to any other LLC Members, if applicable.
5. Apply for an EIN for your DC LLC
A District of Columbia LLC EIN (Employer Identification Number) is obtained from the IRS after your DC LLC is approved by the DLCP.
An EIN is also called an EIN Number, FEIN, Federal Employer Identification Number, or a Federal Tax ID Number. They all mean the same thing.
It’s helpful to think of your District of Columbia LLC’s EIN Number as its “social security number”. It helps identify your LLC to the IRS for tax and filing purposes.
Your District of Columbia LLC’s EIN will also be used when you open an LLC bank account, register your LLC with the Office of Tax & Revenue, and process employee payroll (if applicable).
How is a DC LLC taxed: The IRS doesn’t have a specific tax classification for LLCs and instead, a District of Columbia LLC can be taxed 4 different ways with the IRS; 2 of which occur by default (they occur simply by obtaining your LLC’s EIN), and 2 require a special election be made (a form must be filed after you obtain your LLC’s EIN). We recommend reading how is an LLC taxed before applying for an EIN for your LLC.
Wait for LLC approval: Don’t apply for an EIN until your District of Columbia LLC is approved by the DLCP.
An EIN is free ($0): The IRS will issue an EIN to your LLC at no cost.
EIN Responsible Party: This will be the IRS’s “contact person” when you apply for your DC LLC’s EIN. If you have a Single-Member LLC, you will be the Responsible Party. If you have a Multi-Member LLC, any LLC Member can be the Responsible Party. For more information, please see EIN Responsible Party for LLC.
How to apply for an EIN: There are 3 ways to apply for an EIN for your District of Columbia LLC:
- If you have an SSN or ITIN, you can apply for an EIN online
- If you apply for an EIN online and you get an error message, you’ll need to apply for an EIN with Form SS-4 instead
- If you don’t have an SSN or ITIN, you can still get an EIN for your LLC by following these instructions: how to get an EIN without an SSN or ITIN
6. Tax Registration with the Office of Tax & Revenue
DC LLC Tax Registration is required for all Limited Liability Companies in the District.
After your District of Columbia LLC is approved by the DLCP and you’ve received your EIN Number from the IRS, you then must register your LLC for taxes with the Office of Tax & Revenue (OTR).
Fee: Tax registration is free.
Method of registration: File online via the OTR’s web portal, called MyTaxDC
FR-500 online filing: On the MyTax.DC.gov homepage, look in the middle of the page for “Register a New Business: Form FR-500“.
The FR-500 tax registration will ask you a series of questions about your DC LLC. Once submitted, your LLC will be registered for the necessary DC taxes and you’ll be notified about when those taxes are due.
Approval & LLC Notice Number: After you submit the FR-500, you’ll receive a Notice of Business Tax Registration letter in the mail within 3 to 5 business days. In the upper-right corner of your letter will be your LLC’s Notice Number. You’ll need this number in order to apply for your Basic Business License (discussed a few steps below).
7. Certificate of Occupancy or Home Occupation Permit
All LLCs in the District of Columbia must either have a Certificate of Occupancy or Home Occupation Permit in order to operate.
Certificate of Occupancy: Used for commercial buildings. Sometimes called “C of O”. Necessary if you will own or develop office/commercial space. If you rent office/commercial space, you may be able to use the building’s existing Certificate of Occupancy. Check with owner or management.
Home Occupation Permit: Used for residential buildings. Sometimes called “HOP”. Required if you work from home. It doesn’t matter if you rent or own the home, a Home Occupation Permit is required.
Costs: Home Occupation Permit is $122. A Certificate of Occupancy is $75 for most, but may be more depending on the square footage of the building.
How to apply: Apply online for a Home Occupation Permit. Most Certificate of Occupancy applications are done by completing all the forms and emailing them to the Department of Buildings.
If you don’t have a physical location in DC and you don’t work from home in DC, then you don’t need a Certificate of Occupancy or a Home Occupation Permit.
If your LLC is located in the District you must have either a Certificate of Occupancy or a Home Occupation Permit. You will need the Certificate or Permit Number for the next step; applying for a Basic Business License.
8. Basic Business License
In addition to a Certificate of Occupancy or Home Occupation Permit, all LLCs in the District of Columbia must also have a Basic Business License (BBL) in order to operate.
Before applying: Make sure you have your LLC’s Certificate of Organization, your LLC’s EIN Number, your Notice of Business Tax Registration letter, and your Certificate of Occupancy or Home Occupation Permit. You will need all this information when applying for your BBL.
Costs: The cost for a Basic Business License is not a flat fee, it depends on the type of business. On average, a BBL will cost between $200 to $500 (every 2 years).
Tip: It’s easier to think of a Basic Business License as really a Basic Business License AND its endorsement category “clumped” together.
General Business License (GBL): If your business doesn’t fall into any of the other endorsement categories, then you can use the “General Business License” endorsement category. A GBL costs $325 every 2 years.
How to apply: We recommend applying for a BBL either online or in-person.
Apply online: Use the My DC Business Center (you need an “Access DC” login).
Apply in-person: Visit the DLCP Business License Center at 1100 4th Street SW, 2nd Floor, Washington DC 20024. You can use the kiosks there to complete your online application.
Renewals: All Basic Business Licenses need to be renewed every 2 years. (Unless you purchase a 4-year license; then the license is renewed every 4 years.)
9. District of Columbia LLC Biennial Report
Your new company must file a DC LLC Biennial Report, which is due every 2 years. The Biennial Report is required for all LLCs in the District and it keeps your LLC in compliance and in good standing.
Cost: The LLC Biennial Report costs $300 (every 2 years).
Due date: The Biennial Report is due every 2 years by April 1st.
Your first LLC Biennial Report is due the year after the year that your LLC was approved. So if your LLC was approved June 10, 2023, your first LLC Biennial Report is due by April 1st, 2024.
Penalty: There is a $100 penalty if your Biennial Report is late. If you continue to ignore the requirement, the DLCP will shut down your LLC.
Reminders: The DLCP will email a courtesy reminder to your LLC’s Registered Agent email address.
10. District of Columbia Taxes
Every small business has a unique DC LLC Taxes situation, but we can provide an overview of the requirements.
Income tax: You are responsible for paying income tax to the federal government (IRS) as well as to the District of Columbia (Office of Tax & Revenue).
Federal income taxes: By default, LLCs are “pass-through” entities, meaning that the LLC doesn’t pay its own taxes, but rather, the profits or losses “flow through” to the owners and the owners have the responsibility of reporting and paying federal taxes. Exceptions to this are if you elect to have your LLC taxed as a Corporation.
(Note: An LLC taxed as an S-Corporation is also a “pass-through” entity.)
The IRS doesn’t have an “LLC tax classification”; therefore, LLCs are taxed based on the number of Members they have.
Single-Member LLC: This will be an LLC taxed as a Sole Proprietorship. Most will list their LLC’s income on a Schedule C as a part of their personal 1040 federal tax return.
Multi-Member LLC: This will be an LLC taxed as a Partnership. The LLC files an informational return (Form 1065), but the LLC doesn’t pay taxes. Instead, the LLC issues a K-1 to each Member (showing their portion of profits) and then each Member lists that income as a part of their personal 1040 federal tax return.
DC franchise tax returns: Although LLCs are “pass-through” entities at the federal level, they are not at the District level. Instead, LLC’s are levied a franchise tax. This can be thought of as a tax for the privilege of doing business in the District. Currently, it’s an 8.25% tax on an LLC’s net income.
Unincorporated Business Franchise Tax (Form D-30): This return must be filed by all District of Columbia LLCs that have more than $12,000 in gross receipts and are taxed as either a Sole Proprietorship or a Partnership.
Corporate Franchise Tax (Form D-20): This return must be filed by all District of Columbia LLCs that are taxed as a C-Corporation or an S-Corporation.
Minimum franchise tax: The minimum franchise tax any LLC will pay is $250 (regardless of your LLC’s net income), however this amount will be higher depending on your LLC’s gross receipts, net income, and taxable income.
Estimated taxes (D-20ES or D-30ES): Regardless of how your DC LLC is taxed, if its estimated that it will owe the District more than $1,000 in taxes, you must file quarterly estimated taxes and payment vouchers. LLCs taxed as Sole Proprietorships or Partnerships will file D-30ES and LLCs taxed as C-Corporations or S-Corporations will file D20-ES.
Personal Property Tax (FP-31): All District of Columbia LLCs (regardless of how they are taxed) must file an informational return called the Personal Property Tax Return. A tax will only be due by those LLCs that have personal property valued at $225,000 or more.
Sales tax: If your LLC will sell retail or tangible goods, you must collect sales tax from your customers and then file with the Office of Tax & Revenue. Note, some service-based businesses must also file sales tax in DC. If you need help with your sales tax filings, we recommend using TaxJar.
Other taxes: The above is a general overview and doesn’t include all the taxes you may be responsible for. Taxes vary widely and depend on many factors, such as how your LLC is taxed, where it’s located, who the owners are, if there are employees, and your industry. Other types of taxes in DC include (but are not limited to) ballpark taxes, payroll taxes, unemployment taxes, and industry-specific taxes.
Accountant: We recommend working with an accountant in the District of Columbia to make sure you properly file your federal and District taxes.
11. District of Columbia LLC Bank Account
Once the IRS has issued an EIN Number to your DC LLC, you can open a business bank account for LLC.
It’s best practice to have a business checking account for your District of Columbia LLC in order to maintain your personal liability protection. Using a personal bank account for your LLC is called “commingling of assets” and this can lead to personal liability issues if you end up in court.
Having a separate business bank account for your District of Columbia LLC also makes record-keeping easier for accounting and tax purposes.
Since banks in the District all have their own rules and regulations, we recommend calling a few places to determine the following:
- minimum initial deposit
- minimum balance requirements
- monthly maintenance fees (if any)
Required DC LLC paperwork: In order to open a business bank account for your District of Columbia LLC, you’ll likely need to have the following:
- Articles of Organization (stamped and approved)
- Certificate of Organization
- EIN Confirmation Letter from the IRS
- Notice of Business Tax Registration Letter
- Certificate of Occupancy or Home Occupation Permit
- Basic Business License
- Photo ID (driver’s license and/or passport)
- Operating Agreement (it may not be needed, but it’s a good idea to bring anyway)
Note: Call the bank ahead of time and double-check what documents are required.
LLC Members: If you have a Multi-Member DC LLC, all Members that want to be on the bank account should be present when opening the account.
Non-U.S. residents: If you are a non-US resident that has formed an LLC in the District of Columbia, you can still open a U.S. business bank account. You can find more information here: opening an LLC bank account for non-US residents.
Debit card: The bank will give you a debit card when you open the account.
Credit card: You can also get a business credit card to earn points, miles, and other rewards.
12. DC Business Phone Number
Instead of giving out your cell phone number (or home telephone number), it might be a good idea to get a separate business phone number for your District of Columbia LLC.
We recommend getting a phone number from Phone.com. They have the most affordable plans and great customer service.
You can get a local DC telephone number or you can get a “1-800” number for your business. Phone.com lets you setup call forwarding to any number you like, create pre-recorded messages, and you can get your voicemails sent right to your email.
Getting a separate phone number for your District of Columbia LLC is also a good idea if you’d like to keep your actual phone number off of those annoying “public record” websites.
DLCP Subdivisions & Agencies
Website: DLCP: Corporations Division
Department of Buildings
(Certificate of Occupancy or Home Occupation Permit)
Website: DC Department of Buildings
Business Licensing Division
(Basic Business License)
Website: DLCP: Get a Business License
Small Business Resource Center
(General Advice and Resources for Small Businesses)
Website: DLCP: Small Business Resource Center (SBRC)
Office of Tax & Revenue
(Registration and payment of DC taxes)
Website: DC.gov: Office of Tax and Revenue