The idea of starting a limited liability company (LLC) in the District of Columbia may seem daunting at first. But with a bit of help, you can learn how to form a DC LLC of your own.
This article will teach you:
- The steps to create a Washington DC LLC
- Essential tasks to address once you register your LLC
- The cost and length of time it takes to start an LLC in Washington DC
If you’re ready to learn how to form a District of Columbia LLC, read on!
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Step 1: Name your Washington D.C. LLC
The first thing you want to do when starting an LLC is come up with a name. Washington DC law requires you to include certain words in your name. Additionally, some other words are prohibited.
The following sections will give you more info about LLC name requirements.
Words You Have to Use
DC Code Section 29–103.02 requires all LLC names to include one of the following terms or abbreviations:
- “limited liability company”
- “limited company”
You’re also allowed to abbreviate “limited” as “ltd.” and “company” as “co.”
Words You Can’t Use
DC Code Section 29–103.01 says you can’t use the following words in your name without prior approval:
- “credit union”
- any words of a similar meaning
The statute also says that your LLC name can’t be the same as, or deceptively similar to, the name of any government entity.
Your LLC’s name also can’t suggest that you provide illegal services. For example, if you don’t have the license you need to offer certain services, your business name can't imply that you offer them.
The big rule is this: if you need a license to do your job, double-check with the Washington DC Department of Consumer and Regulatory Affairs to make sure your company name complies with the law.
Section 29–103.01 also requires your LLC name to be “distinguishable” from the other names that have been registered with the District of Columbia Department of Consumer and Regulatory Affairs (DCRA). This law prevents consumers from being confused by two businesses with the same name.
Research the LLC Name You Want
Once you’ve chosen a name for your LLC, you can use the DCRA’s CorpOnline portal to check if the business name is available.
You’ll need to create an account to search for business names. But once you have an account, you can use it to file all your LLC formation documents.
If your chosen LLC name is already taken, you can’t use the name unless the other party consents and agrees to change its name. Or, if the name is registered to a different type of business entity, that party can consent to you using the name for your LLC.
Say you want to use the name “Paula’s Pastries, LLC” for your business. Under DC law, that name would not be considered to be distinguishable from a corporation named “Paula’s Pastries Inc.” But you would still be able to use the LLC name if the owner of Paula’s Pastries Inc. consented.
If the name you want is available, DC Code Section 29–103.03 lets you reserve it for 120 days. To do so, you must file a Name Reservation Registration and Transfer Form with the DCRA.
You can reserve a business name through the CorpOnline portal, or you can mail the form with a check to the following address:
Department of Consumer and Regulatory Affairs
PO Box 92300
Washington, DC 20090
There is a $50 filing fee for name reservations.
For all mail filings, you must also fill out and include a Mail-in Filing Cover Letter with your submission.
Get a Matching Domain
Once you settle on an LLC name, we recommend you get a matching domain, even if you don’t have immediate plans for a website.
Competitors can buy your perfect domain and its variations to block you from using them.
Domain squatters sift through public records of newly registered LLCs and will buy their matching URLs, only to relist them with huge markups.
A domain name from GoDaddy.com or a similar registrar will cost you between $20 and $50 per year, with regular specials and sales where you can get large discounts.
It pays to check now.
Once you have your domain name, you can also create a branded email address through GoDaddy.
Washington D.C. DBA: Using a Trade Name
A “Doing Business As” name, also known as a “DBA,” is an alternate name for a company. With a DBA, you can use a shorter and less formal name to refer to your business. This is why many LLC owners use DBAs for the daily operation of their businesses.
If your LLC’s legal name is “Denver’s Omelettes, LLC,” you can “go by” a DBA of “Denver’s Omelettes.”
But say that you later expand your menu to offer other breakfast and lunch items. By using a new DBA of “Denver’s Diner,” you can ensure that your customers know what you have to offer.
The District of Columbia calls DBAs “trade names.” Under DC Code Section 47–2855.02, you must register any trade name you want to use for your LLC with the DCRA.
You can do this by filing a Trade Name Registration Form by mail or through the CorpOnline portal. There is a $55 filing fee.
Step 2: Appoint a Registered Agent for your LLC
A registered agent is an individual or company that receives legal documents for a business.
DC Code Section 29–104.02 requires LLCs to maintain a registered agent with a physical address in the District of Columbia. Registered agents must also be available to accept service of process during normal business hours.
Accepting service of process is a legal phrase that refers to receiving documents during lawsuits. So, if someone sues your LLC, the legal paperwork will be sent to your Washington DC registered agent.
You can elect to name a commercial or a non-commercial registered agent in Washington DC. The main distinction between these agents is that commercial agents are “in the business” of being registered agents.
Many new LLC owners might want to be the registered agent for the company. And there are some advantages to taking this route:
- It’s cheap: You’re not paying someone else to do it for you.
- It’s easy: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
But the truth is, these entrepreneurs often find out too late that being their own LLC’s registered agent can cause trouble.
Here are examples of some of the problems you might face:
- No privacy: Your name and address will be published on the DCRA’s website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
To avoid the issues outlined above, consider using a professional registered agent service. It usually only costs about $100 a year, and the service will notify you whenever you receive new documents.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
If you want to do business outside DC, it makes sense to use a nationwide registered agent service. To expand, you must register as a foreign LLC and name a registered agent in every state where you plan to do business.
With a national service, you only have to find one provider to be your registered agent in DC and the states where you register as a foreign LLC. This way, you can save the time and effort you’d spend maintaining relationships with different agents.
Step 3: File Your Washington D.C. LLC Certificate of Organization
A Certificate of Organization (sometimes called Articles of Organization) is the legal document that creates a District of Columbia LLC. It lists basic info about your business and must be submitted to the DCRA.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Washington D.C. Certificate of Organization?
According to DC Code Section 29–802.01, your certificate of organization must include:
- The LLC’s name.
- The name and address of the registered agent.
- The street and mailing address of the principal office.
If you use a commercial registered agent, all you need to do is submit their name. But if you want to use a non-commercial registered agent, make sure to also provide their street address.
You can submit an Articles of Organization form by mail, in person, or through the CorpOnline portal.
Washington D.C. LLC Filing Fee
According to the DCRA’s Corporations Division Fees list, the filing fee for a Washington DC Certificate of Organization is $99.
Read More: How Much Does It Cost to Form an LLC in Washington D.C.
Washington D.C. LLC Processing Time
Filings will typically be reviewed within five business days. You can select expedited three-day service for an additional $50 fee or one-day service for a $100 fee. Walk-ins will automatically be charged the $100 fee for one-day service.
Step 4: Draft your Washington D.C. LLC Operating Agreement
Operating agreements are contracts that outline the rights and responsibilities of each member of an LLC. They also detail what happens when decisions need to be made and how the company will be managed.
DC doesn’t require you to have an operating agreement for your LLC. Still, it can be a good idea for members to agree on how to manage the company before anything happens.
For example, what if an LLC member wants to sell their interest in the business? An operating agreement can spell out the process for selling and how to decide who will take over the exiting member’s duties.
LLC Operating agreements can also be useful because:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the LLC operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
Every LLC member should contribute to the drafting of an operating agreement. By making a collaborative effort, everyone will have their say and understand how the business will be managed.
To learn more about DC’s rules on operating agreements, check out DC Code Section 29–801.07.
Step 5: Get an EIN (Employer Identification Number) for Your Washington D.C. LLC
An Employer Identification Number (EIN) is similar to an SSN for your LLC. It's a 9-digit number issued by the IRS that can be used to identify businesses.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If any of these apply, your LLC is required to get an EIN.
If you have a single-member LLC, you can use your SSN to file your taxes. However, if you want to open a business bank account and prevent fraud, it's best to have an EIN. It'll also make some administrative tasks easier.
It’s free to get an EIN, and the process only takes a few minutes. You can apply for an EIN on the IRS website or by filling out and mailing a Form SS-4 to the IRS.
Read More: How to Get an Employer Identification Number in Washington D.C.
First Tasks After Registering your Washington D.C. LLC
After starting your District of Columbia LLC, there are some additional steps you should take to get ready to open for business. Handling these tasks will help you set yourself up for success.
Open a Business Bank Account
To keep your personal assets separate from company assets, it is a good idea to open a bank account for your LLC. This will enable you to use the funds you need to run your business without risking your personal assets.
A business bank account provides:
- Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.
Asset protection is the most important one on this list.
Because of a legal concept called the “corporate veil,” LLCs are considered to be separate legal entities from their owners. This means that they can offer you protection from personal financial risk since creditors cannot hold you liable for debts incurred by your company.
But, if you “commingle” your personal assets and the LLC’s funds in the same bank account, the corporate veil can be “pierced” in a lawsuit. And if the veil is pierced, you can be held personally liable for the LLC’s debt.
Opening an LLC bank account can help protect you from liability. It will shelter your personal assets from business creditors. Only the company’s assets will be at risk.
Get Business Insurance For Your Washington D.C. LLC
We also suggest that you make sure your DC LLC is covered by business insurance. You can create an insurance plan that makes sure you’re protected from the risks faced in your industry.
You should consider the following types of business insurance:
- General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers’ compensation insurance: Washington DC law requires most employers to carry workers' compensation insurance. You can decide to buy a policy from a private insurance company or get approved by a court to self-insure.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Washington D.C. LLC Company Compliant
After starting your Washington DC LLC, you need to follow local regulations. For instance, many companies will need to pay taxes and get a business license.
Keep your eye on local legislation. It's essential to stay informed about any changes. That way, you can take care of legal requirements and be prepared for the future.
Washington D.C. Business Permits and Licenses
Most DC LLCs will need to register for a Basic Business License (BBL). You can do this online using the DCRA’s My DC Business Center portal.
Washington D.C. Tax Requirements
LLCs in the District of Columbia are subject to an Unincorporated Business Franchise Tax. To pay this, you’ll first need to register your business with the MyTax DC online portal.
Federal LLC Tax Filing Requirements
LLCs are considered “pass-through” legal entities. This means that any profits the company makes will go directly to you, the LLC owner. So, you’ll need to report the LLC’s income on Schedule C of your personal tax return.
Your LLC is also subject to Social Security and Medicare taxes, even if you don’t plan to hire any workers. If you do have employees, you’ll need to deduct payroll taxes from their wages.
Biennial Report and other Filing Requirements
DC Code Section 29–102.11 requires LLC to submit a biennial report to the DCRA every other year. You can file your report, along with a $300 filing fee, using the CorpOnline portal.
Washington D.C. Business Formation Quick Links
- Internal Revenue Service — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- CorpOnline (DCRA)
- Mail-in Filing Cover Letter (DCRA)
- Business Registration FAQs (DCRA)
- Corporations Division Fees (DCRA)
- My DC Business Center
- MyTax DC
- Name Requirements: DC Code Section 29–103.02
- Additional Name Requirements: DC Code Section 29–103.01
- Name Reservation: DC Code Section 29–103.0
- Trade Name: DC Code Section 47–2855.02
- Registered Agent: DC Code Section 29–104.02
- Certificate of Organization: DC Code Section 29–802.01
- Operating Agreement: DC Code Section 29–801.07
- Biennial Report: DC Code Section 29–102.11
Washington D.C. LLC FAQs
How much does it cost to start a Washington D.C. LLC?
According to the DCRA’s Corporations Division Fees list, the filing fee is $99.
What is the processing time to form my Washington D.C. LLC?
Filings will typically be reviewed within five business days. You can select expedited three-day service for an additional $50 fee or one-day service for a $100 fee.
What are the benefits of a Washington D.C. LLC?
LLCs have some advantages over sole proprietorships, like liability protection. They also may be beneficial for your annual taxes.
Where do I check if my Washington D.C. LLC name is available?
Once you’ve chosen a name for your LLC, you can use the DCRA’s CorpOnline portal to check if it’s available.