Last updated October 12, 2020
Starting a Business in Washington DC
There are 8 steps to starting a business in Washington DC:
- Choose a name for your business
- Choose the right type of business entity
- Register your business with the Department of Consumer & Regulatory Affairs
- Get your EIN Number (Federal Tax ID Number)
- Open a business bank account
- Register for taxes with the Office of Tax & Revenue
- Get a Certificate of Occupancy or a Home Occupation Permit
- Get a Basic Business License
We’ll show you how to complete each step below. We will also give you some tips to make starting your business in Washington DC easier.
Step 1: Choose a Name for Your DC Business
Choosing a name for your Washington DC business is not something you want to breeze through. In fact, rushing the process of choosing your business name can be a big mistake.
We recommend taking some time to choose a name people will remember and positively associate with your business.
To make sure your business is worth remembering, you should choose a name that:
- rhymes or contains alliteration (ex: Piggly Wiggly, Dunkin’ Donuts)
- speaks about the benefits of your business
- you can say it with pride
- is easy to pronounce
- has a positive connotation for your potential customers
- and ideally, is available as a “.com” domain name
By the way, the first bullet point above refers to the phonological loop. Your brain can better remember words that rhyme and sound similar.
For additional business naming tips, check out how to choose a good business name.
After you’ve thought of a few business names, you should search them on the Washington DC Business Name Search page: https://corponline.dcra.dc.gov/Account.aspx/LogOn. You have to create a CorpOnline account in order to search for business names in the District.
How to find a good domain name:
Finding a good domain name nowadays is not always that easy. To help you out, we recommend using Lean Domain Search: https://www.leandomainsearch.com. Just enter one or two key terms relevant to your business, and the tool will come up with a list of domain names that are not only available, but are also easy to spell and remember.
(note: there are more tips on domain names and websites at the bottom of this guide)
Step 2: Choose the Right Type of Business Entity
Next, you’ll need to decide the best type of legal structure for your Washington DC business.
The most common business structures are:
- Sole Proprietorship
- Limited Liability Company (LLC)
Sole Proprietorship in Washington DC: Happens when you operate your business as yourself. There is no separate legal entity created; the law treats you and your business as one person. You are responsible and personally liable for all business activities or wrongdoing.
Washington DC Partnership: The same thing as a Sole Proprietorship, but just with 2 or more people. Like a Sole Proprietorship, a Partnership doesn’t create a separate legal entity and the partners are responsible and personally liable for any business activity or wrongdoing.
Washington DC Corporation: A more complex legal structure that requires a board of directors, corporate officers, and shareholders. Corporations don’t usually work for most small business owners since they face double taxation. Corporations can be beneficial to companies that are looking to raise capital investment, take the company public, or have large healthcare expenses for their employees. The most common types of companies that form Corporations are high-growth technology and startup companies.
Unlike a Sole Proprietorship or a Partnership, a Corporation is a separate legal entity from its owners (called shareholders). It provides them with personal liability protection.
Washington DC LLC: A legal entity that combines the benefits of a Corporation and a Sole Proprietorship/Partnership.
An LLC in Washington DC is a separate legal entity under the law. And like a Corporation, it provides personal liability protection for the owners. If the LLC is sued, the owner’s personal assets – like their home, cars, and bank accounts – are protected. And like a Sole Proprietorship/Partnership, an LLC has pass-through taxation (so there’s no double taxation).
A Washington DC LLC is the most popular option and a good choice for people who want to run a small business for two reasons:
- Personal liability protection (personal assets are kept safe)
- No double taxation
Unlike a Sole Proprietorship (and a Partnership), your Washington DC LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
And unlike a Corporation, your LLC is not subject to double taxation. Instead, your LLC’s profits will “pass-through” to your personal tax return and federal taxes are paid just once.
For more details, on which is the best entity type for you, please see:
LLC vs Sole Proprietorship vs Corporation
If you want to form an LLC in Washington DC, we have instructions here: Washington DC LLC formation.
If you want to form a Corporation in Washington DC, you can file it yourself or you can hire a filing company like Northwest Registered Agent.
Step 3: Register Your Business with the DCRA
You may need to file business formation documents with the Department of Consumer & Regulatory Affairs (DCRA) in order to properly register your business in the District.
Regardless of what type of business structure you choose in DC though, all businesses must obtain a Certificate of Occupancy or a Home Occupation Permit as well as get a Basic Business License (BBL). These are discussed further below on this page.
Washington DC LLC:
The cost to form a Washington DC LLC is $220.
Form: DLC-1 (Articles of Organization)
Biennial Report: In order for a DC LLC to remain in good standing, it must file a Biennial Report every 2 years. The LLC Biennial Report fee is $300.
Washington DC Corporation:
For most people, the cost to form a Washington DC Corporation is $220.
Form: DBU-1 (Articles of Incorporation)
The $220 is the “starting” filing fee amount if your Corporation’s authorized capital is valued at $100,000 or less. Filing fees increase based on the value of the authorized capital:
- authorized capital $100,000 or less = $220 filing fee
- authorized capital $100,001 – $500,000 = $550 filing fee
- authorized capital $500,001 – $1,000,000 = $1,100 filing fee
- authorized capital $1,000,001 or more = $1,650 filing fee
Authorized capital: Authorized capital is simply the total value of all shares that your Corporation issues. To calculate: multiply the total number of shares (all classes) by the par value per share.
Biennial Report: In order for a DC Corporation to remain in good standing, it must file a Biennial Report every 2 years. The Corporation Biennial Report fee is $300.
Washington DC Sole Proprietorship or Partnership:
Unlike a Washington DC LLC and a Washington DC Corporation, if you choose to operate your business as a Sole Proprietorship (1 owner) or a Partnership (2 or more owners), you don’t have to file any “formation” documents with the DCRA.
However, if you would like for your Sole Proprietorship or Partnership to operate and do business under a name besides the first and last name of the owner(s), you’ll need to register a Trade Name in the District, also known as a DBA/”Doing Business As”.
For example: If John Doe wants to operate a Sole Proprietorship in Washington DC, but wants to operate under the name “John’s Remodeling Company”, he must register this as a Trade Name.
Washington DC Trade Name:
Form: TN-1 (Trade Name Registration Form)
Fee: The cost to register a Trade Name in DC is $55.
Renewal: Trade Names must be renewed every 2 years by April 1st. The form is called TN-2 (Trade Name Renewal Form) and the cost is $55.
Is a Trade Name needed for an LLC or Corporation?
If you’re going to form an LLC or Corporation in Washington DC and operate under the LLC or Corporation’s true name, you don’t have to file a Trade Name/DBA (unless you want your entity to do business under a name other than its true name).
For more information on whether or not a Trade Name/DBA is needed for your DC business, please see this article: Do I need a DBA?
Is there a newspaper publishing requirement for a DC Trade Name?
Unlike many states that require you to publish an ad in a newspaper after registering a Trade Name, this is not a requirement in Washington DC.
If you have any questions, you can contact the Washington DCRA:
Step 4: Get an EIN Number
An EIN Number is also known as an Employer Identification Number (EIN) or Federal Tax ID Number (FEIN). It is used by the IRS to identify your Washington DC business for tax purposes.
Think of your EIN Number as the “social security number” of your Washington DC business.
The EIN Number for your Washington DC business will be used to open a bank account, file taxes, get financing, and handle employee payroll (if applicable).
You can get an EIN for your Washington DC business by mail, fax, or online. Getting your EIN online is the fastest option, since it only takes about 15 minutes to complete the application.
You can access the IRS EIN Online Application here:
For instructions on how to complete the online EIN application for a Washington DC LLC, please see here: District of Columbia LLC EIN Number.
Note: Make sure your LLC or Corporation is approved before applying for an EIN Number.
Step 5: Open a Business Bank Account
A business bank account (and a business debit/credit card) for your Washington DC business is important because:
- it keeps your personal assets separate from your business assets
- accounting and finances will be easier to manage
One of the main reasons courts are able to “pierce the corporate veil” is due to the commingling of assets. This is when business and personal finances are mixed together.
Keeping the assets of your Washington DC business separate from your personal assets will make accounting and documenting expenses a lot easier as well.
To learn how to open a bank account for your Washington DC LLC, you can read this lesson: LLC business bank account
Your bank will provide you with a debit card after the account is open. You can also get a business credit card and earn cash back or other rewards.
Step 6: Register with the Office of Tax & Revenue (OTR)
After your Washington DC business is formed, you’re required to register it with the DC Office of Tax & Revenue (OTR).
• Done online, via the OTR’s online filing portal called MyTax.DC.gov: https://mytax.dc.gov/_/
• Click “Register a New Business: Form FR-500” on the MyTax.DC.gov’s home page, or try this direct link: https://mytax.dc.gov/?link=FR500
Fee: Registering your Washington DC business for tax purposes is free.
By going through the FR-500, you will be answering a number of questions about your DC business. Based on your answers, the online system will register your business for its applicable taxes and let you know when they need to be filed.
Approval: Within about 1 week the OTR will mail you a Notice of Business Tax Registration as verification and approval.
Sales tax: If your Washington DC business will sell tangible personal property, you’re required to collect sales tax from your buyers.
Sales tax help: TaxJar can help you by automating your sales tax filings in Washington DC.
Other taxes: The above is a general overview of tax registration in the District, however, there are far more details that go into taxes.
For example, you have to file D-40 (Individual Income Tax) every year as an individual, and depending on how your business is setup in DC, you may need to file either a:
- D-20 (Corporation Franchise Tax Return),
- D-30 (Unincorporated Business Franchise Tax Return), or
- D-65 (Partnership Return of Income)
Personal Property Tax: All businesses located in Washington DC must file a FP-31 (Personal Property Tax Return) as well as a FP-31P (Personal Property Tax Return Payment Voucher) if payment is due. Everyone has to file the Personal Property Tax Return, but you’ll only owe a tax if the total value of your business’ personal property is $225,000 or more.
Our recommendation is to speak with an accountant:
We recommend working with an accountant to make sure you properly register your business for DC taxes, in addition to properly filing any federal, state, and local taxes for which you’re responsible.
Step 7: Certificate of Occupancy or Home Occupation Permit
All businesses in Washington DC must get either a Certificate of Occupancy or a Home Occupation Permit in order to legally operate. If not, the District imposes fines and penalties.
Certificate of Occupancy (C of O): Used for commercial office space. If you own a commercial building or are developing a new one, you will need to apply for a new Certificate of Occupancy. If you plan to rent office space in DC, you likely don’t need to apply for a new Certificate of Occupancy. Instead, speak with the owner or management company and make sure their Certificate of Occupancy allows for your type of business to operate within its building. You’ll want a copy of their Certificate of Occupancy and/or their Certificate of Occupancy Number.
Home Occupation Permit (HOP): Used for residential space. You will need a Home Occupation Permit if you’re going to run your business from your home.
Walk-in filing: Both a Certificate of Occupancy and Home Occupation Permit can be obtained via a walk-in filing at:
DC Permit Center
1100 4th Street SW
Washington, DC 20024
Parking: There is a parking garage next to the CVS if you can’t find street parking.
Certificate of Occupancy Application:
Certificate of Occupancy (C of O) Application
Certificate of Occupancy Fee: There is an application fee ($36.30) and an issuance fee. Your final issuance fee will depend on the square footage of the building. It usually starts around $40 to $50. You won’t have to pay this fee if you’re renting office/commercial space and the building already has a Certificate of Occupancy.
Home Occupation Permit Application:
DCRA: Home Occupation Permit Application
Home Occupation Permit Fee: There is an application fee of $36.30 and an issuance fee of $36.30, for a total of $72.60.
Step 8: Get a Basic Business License
In addition to a Certificate of Occupancy or Home Occupation Permit, all businesses in Washington DC must also apply for a Basic Business License (BBL) in order to legally operate. If not, your business will be illegally operating without a license and the District will impose fines and penalties.
Before you can get a Basic Business License (BBL) for your business, you must:
- have your business entity approval documents from the DCRA (LLCs and Corporations)
- get an EIN Number from the IRS
- register your business with the Office of Tax & Revenue
- receive a Certificate of Occupancy or Home Occupation Permit
Then you can apply for your Basic Business License at the same location where you got your Certificate of Occupancy or Home Occupation Permit:
Business Licensing Center
1100 4th Street SW
Washington, DC 20024
Basic Business License Application:
You can also apply for a BBL online at My DC Business Center: https://mybusiness.dc.gov/#/register
Clean Hands Self-Certification: You’ll also need to sign a Clean Hands Self-Certification letter stating that you don’t owe the Office of Tax & Revenue more than $100:
Fee: Basic Business License fees start around $200 and go up to $500 (and in some cases up to $1,000). The fees will depend on your business’ Endorsement Category. For example, a BBL for operating a rental property is $190 for 2 years and a BBL for the “general business” category is $325 for 2 years.
BBL Renewals: Your Basic Business License will be good for 2 years before it expires. You must renew your Basic Business License every 2 years and pay the renewal fee.
After Your Washington DC Business is Started…
1. Meet with a Local DC Business Expert for Free Counseling
Getting advice from others who’ve been there can be helpful in your entrepreneurial journey.
Here are some great organizations in Washington DC:
- DC Small Business Development Center
- DC Small Business Resource Center
- Anacostia Economic Development Corporation
- GW Law Small Business & Community Economic Development Clinic
- DC Women’s Business Center
- DC Bar Small Business Legal Assistance Program
- Department of Small and Local Business Development
- Resource Guide for Small Businesses (see page 12)
- Washington DC Economic Partnership
- Alexandria Economic Development Partnership
2. Start a Website
Having a website these days is very helpful for a Washington DC small business. It gives your company a professional feel and allows people to learn about your products and services.
Building a website can seem like a complicated process. And it will be if you don’t have the right information.
However, I’ve built over 130 websites and used to teach people how to use WordPress to build their website. WordPress (which is free) is the tool I use and recommend. It can be used to build simple websites or it can be used to build more complicated websites, like eCommerce websites.
There are 4 components to starting a website:
- Domain registrar
- Website hosting
- WordPress theme
Let’s use the “housing analogy”:
The domain registrar is where you purchase your domain name. Think of this as the label on the mailbox or your street address.
A website hosting company is where all the code, images, graphics, and text are stored that gets provided to the world. Think of this as the foundation of your home. It gives you the ability to build on top of it and display information to others.
WordPress is a CMS (content management system) which makes it easier to build a website. Rather than constructing your home from scratch, think of WordPress as a prefabricated home where you can easily resize rooms, move walls, and have complete flexibility in design and customization. WordPress – or the prefabricated home – “sits on top of” your foundation (the website hosting).
A WordPress theme is a “design skin” that sits on top of the WordPress CMS. If the WordPress CMS is the prefabricated home, think of the theme as all the interior decorations and painting. There are free WordPress themes, but I recommend against them for various technical reasons. Instead, I recommend using a premium WordPress theme. The difference between a free WordPress theme and a premium one is the difference between an amateur designer and a world-class professional designer.
Here are some links and prices to get you started:
Domain registrar: I recommend NameSilo.com which is $10 per year (per domain name). This is the service we use as it includes domain privacy for free to keep your address and phone number off those public record websites. It’ll also help prevent those annoying telemarketing phone calls!
Website hosting: SiteGround.com ($10 per month)
WordPress: This is automatically included (again, for free) with nearly every hosting company these days. After you sign up with SiteGround, just call them to help you install it. They’ll walk you through the steps.
WordPress theme: ThemeForest.net (one-time fee of $40 to $60 for a WordPress theme)
Note 1: Make sure you’re using the “wordpress.org” self-hosted version. Not the “wordpress.com” version, which is stripped down and comes with limitations on how much you can customize your website.
Note 2: If you need help selecting a theme from ThemeForest, here is an explanatory video I made:
3. Design a Logo and Get Business Cards
Designing a logo doesn’t have to be too complicated.
We recommend starting off with a “words only” logo to keep things simple (no need for any fancy graphics). You can choose the font family and color yourself, or get help from 99 Designs. A cheaper option is to use Fiverr.
For some great tips on using a tagline with your logo, check out Neville Medhora’s article, however, we recommend not even using a tagline (to start) in order to keep things simple. Besides, most people don’t really pay too much attention to a company’s tagline anyway.
And for business cards, I like using Moo.com.
4. Get a Business Phone Number
Instead of giving out/publishing your actual cell phone number (or home telephone number), it might be a good idea to get a “virtual business number” for your Washington DC business. You’ll be able to customize the number so it forwards to your cell phone.
Our favorite company is Phone.com. They have the cheapest plans and the best customer support.
You can get a local DC telephone number or you can get a 1-800 number for your business. Phone.com lets you easily setup call forwarding to any number you like, create pre-recorded messages, and you can get your voicemails delivered to your email.
Getting a separate phone number for your Washington DC business is a good idea if you’d like to keep your actual phone number off of those annoying “public record” websites (and stop the spam phone calls).
I hope this guide has been helpful for you.