How to Start an LLC in DC (Step-by-Step) 2023 Guide

It costs $99 to start an LLC in DC.

And then you’ll need to pay additional fees. Some are one-time fees, and others are due every 2 years.

What are these fees for?

• The $99 is to file the Articles of Organization – the document that creates an LLC.
• The $75 – $125 is for your Certificate of Occupancy or Home Occupation Permit – a mandatory permit required for LLCs operating from a commercial or residential building in DC.
• The $200 – $500 every 2 years is for your Basic Business License – a license that allows your Limited Liability Company to do business in the District of Columbia.
• The $300 every 2 years is for your Biennial Report – a mandatory filing that keeps your LLC in good standing.

To learn more about LLC Costs, see LLC Costs in DC.

If you file your DC LLC by mail, it will be approved in 2-4 weeks (plus mail time).

But if you file online, your DC LLC will be approved in 5 business days.

Please see How long does it take to get an LLC in DC to check for any delays.

Getting an EIN Number from the IRS is completely free.

If you apply online, it takes 15 minutes.

If you apply by mail or fax, it can take 1-3 months.

Tax Registration with the DC Office of Tax & Revenue is free for DC LLCs.

You can register your DC LLC for taxes online using the OTR’s web portal: MyTaxDC.

A Certificate of Occupancy is $75 for most LLCs, but may cost more depending on the square footage of the commercial building.

That said, if you rent office or commercial space, you may be able to use the building’s existing Certificate of Occupancy. Check with the owner or management.

Most Certificate of Occupancy applications are filed by emailing the forms to the DC Department of Buildings.

A Home Occupation Permit is $122. And you must get a HOP regardless of whether you rent or own the home.

You can apply for a Home Occupation Permit online.

All District of Columbia LLCs must file a Biennial Report every 2 years.

The Biennial Report keeps your LLC in good standing with the state.

How much does a District of Columbia LLC Biennial Report cost?

The Biennial Report filing fee is $300 every 2 years.

When is the Biennial Report due?

Your LLC’s Biennial Report is due every 2 years by April 1st.

When is my first Biennial Report due?

Your first Biennial Report is due the year after your LLC was approved.

For example, if your LLC was approved on February 15, 2023, your first Biennial Report is due by April 1, 2024.

And then it’s due by April 1st every 2 years after that.

How do I file my LLC Biennial Report?

You can file your LLC’s Biennial Report online or by mail. We recommend the online filing because it’s easier to complete.

Follow our step-by-step guide here: DC LLC Biennial Report.

You’ll want to open a business bank account for your LLC.

This makes accounting and record-keeping much easier for your business finances.

Having a separate business bank account also maintains your personal liability protection. This is because it keeps your business income separate from your personal finances.

LLCs don’t pay federal income tax. Instead, the LLC Members pay the taxes for the LLC.

Said another way, the owners pay taxes for the LLC as a part of their personal tax return.

How will my LLC be taxed?

By default, a DC LLC is taxed by the IRS based on the number of owners your LLC has:

• A Single-Member LLC is taxed like a Sole Proprietorship.
• A Multi-Member LLC is taxed like a Partnership.

Alternatively, you can ask the IRS to tax your LLC like a C-Corporation or S-Corporation.

Besides federal taxes, there are also state and local income taxes – and sales tax. Learn more in District of Columbia LLC Taxes.

Yes, you can file your LLC online in DC. The Articles of Organization filing fee is $99.

When you start your LLC online, it will be approved in 5 business days.

The first benefit of an LLC is protecting your personal assets. Meaning, if your business is sued, your personal assets – like your home, cars, and bank accounts – are protected.

This protection applies to all LLC owners (called LLC Members). It doesn’t matter if you have a Single-Member LLC or Multi-Member LLC. All of the LLC owners are protected from the business debts and liabilities.

This type of protection wouldn’t apply if you operate as a Sole Proprietorship or Partnership. With these types of informal business structures, the owners aren’t protected in the event of a lawsuit. For that reason, Limited Liability Companies (LLCs) are a much more popular business structure.

Another benefit is LLC pass-through taxation. This means the LLC itself doesn’t pay federal income taxes. Instead, the profits “pass through” to the LLC Members. And the Members pay the taxes on their personal tax return.

And DC income taxes are very similar, since the district honors the federal tax treatment of your LLC.

To learn more, please see How are LLCs taxed.

Whether DC is a good state to start an LLC depends on where you live – and where you’re doing business.

Meaning, if you live in or do business in DC, then you should start your LLC in DC. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business.

For example, if you form an LLC in Delaware, but live in and conduct business in DC, you’ll also need to register your Delaware LLC in DC (and pay extra fees). And you’ll end up paying DC taxes anyway. This ends up leading to more costs and more headaches with no advantages.

In summary, if you live in and conduct business in DC, then yes, DC is a good state to start a business. If you don’t live in and do business in DC, then no, DC isn’t a good state to start a business.

Real estate exception: If you’re purchasing real estate outside of DC, you should form your LLC in the state where the property is located.

For more information, please see Best State to Form an LLC.

The main differences between Domestic LLCs, Foreign LLCs, and Professional LLCs are where they are formed and their business purpose.

A Domestic Limited Liability Company is an LLC that is formed in its “home state”, meaning, where the business owner lives and does business.

For example, if you live in and do business in Georgia, you would form your Domestic LLC in Georgia.

A Foreign Limited Liability Company is an LLC that is formed in a state that isn’t its home state. In this case, the term “foreign” simply means that the LLC is foreign to its “home state”.

For example, if you live in and do business in Georgia, you would form your Domestic LLC in Georgia. If you later expand into Florida, you would register your existing Georgia LLC as a Foreign LLC in Florida.

Said another way, LLCs are created at the state-level.

So if you want your LLC to do business in two separate states, you have to form or register an LLC in both states.

This works by forming a Domestic LLC in your home state, and a Foreign LLC in the other state.

What is a PLLC?

A Professional Limited Liability Company (PLLC) is a type of LLC formed for the purpose of providing “professional services”.

In this case, “professional” refers to business types that require special permissions (like a license, registration, or certification from the state) in order to do business legally.

For example, architects, attorneys, and social work counselors, doctors, and veterinarians often form their business practices as PLLCs.

You can read more about PLLCs, their availability, and their stricter requirements in: What’s a Professional LLC?

And for more information on Foreign and Domestic LLCs, please see:

• Foreign LLCs by State
• Difference between Domestic LLCs and Foreign LLCs

The DC Department of Consumer and Regulatory Affairs (DCRA) used to handle LLC processing.

However, in October of 2022, the DCRA was replaced. And its responsibilities were split between two new departments: The Department of Buildings, and the Department of Licensing and Consumer Protection.