How to Start an LLC in Washington DC? (In 5 Easy Steps)
If you intend to start a limited liability company in Washington DC, there is an established legal business protocol that outlines all the necessary steps and paperwork that have to be completed.
After a decade of practice as a business consultant for limited liability companies, I counseled clients with LLC formation, organization and helped them stay compliant with state laws.
I’ll provide you with a complete guide on how to start a limited liability company in Washington DC, backed with information from LLC experts in the state.
Quick Summary:
- To start an LLC in Washington DC, name your business, appoint a registered agent, file the Articles of Organization and draft an operating agreement.
- Once your limited liability company has been approved by the state, obtain licenses and permits and file biennial reports.
- To make a distinction between your personal assets and business funds, open a separate bank account.
How to Start an LLC in Washington DC?
To start an LLC in Washington DC, you have to name the company, choose a registered agent and file your articles of organization. The procedural details are provided in the succeeding section.
Step 1: Name Your Washington D.C. LLC
Your name must observe the naming guidelines in the District of Columbia. A master list can be accessed through the Department of Consumer and Regulatory Affairs to verify available and reserved names, as well as regulated or restricted entries.
If your desired LLC name is currently in use, you need to find an alternative title for your company and reserve it with the Secretary of State’s website.
For your business name to be approved, follow the guidelines below:
- The company name must include the phrase “Limited Liability Company” or “L.L.C.” to properly identify the business structure. It may not end with “Corporation”, “Incorporated” or “Limited” [1].
- Your LLC name must be clearly distinguishable from other business entity titles and reflect the nature of the industry.
- Words associated with government agencies, such as “Federal”, “Treasury” or “Bureau” may not be included in your company name.
- Words like “Bank”, “Insurance” or “Equity” should be avoided to prevent confusion as to the actual nature of the company.
Step 2: Choose a Registered Agent in Washington D.C.
Choose a registered agent for your Washington DC LLC to receive official legal documents and conduct service of process on behalf of your company.
A physical address of the registered agent must be provided for this purpose, which cannot be a P.O box or mail drop address.
You may want to You have the option to employ a registered agent service or hire a professional to act as your company’s legal representative.
Step 3: File Your Washington DC LLC Articles of Organization
To make your company officially registered and legitimate to conduct business within the state, you need to file your Articles of Organization.
The document is a legal requirement in Washington DC and must include the following pertinent information about your LLC:
- The LLC's trade name
- The LLC's street address
- The registered agent's name and contact details
- Names and addresses of all the members
- The nature and purpose of the business
- Effective date
- The LLC's organizer's name and address [2]
You may file your Articles of Organization through the online system of the District of Columbia Department of Consumer and Regulatory Affairs.
When filing your Articles of Organization, select "Domestic Limited Liability Company (LLC)" as your form type.
There are no additional requirements, aside from filing the $220 dollar fee.
Your Washington DC LLC will receive an effective date upon receiving your articles of organization, which can be expedited if necessary for a small extra fee.
Step 4: Create Your Washington DC LLC Operating Agreement
The operating agreement is an internal document that outlines the provisions for management, capital contributions, allotment of profits and losses, members’ rights, voting procedures and other business and operational protocols.
Inasmuch as the document is not required by most states in forming an LLC, an operating agreement is vital to ensure that the business entity operates under a standardized set of rules and procedures.
Step 5: Comply With Other Tax and Regulatory Requirements
You are required to register your Washington DC LLC for consumer compliance with consumer affairs, if applicable, upon filing articles of organization.
Make sure that you are in compliance with all tax and regulatory requirements, including sales taxes and employment laws.
If you have additional questions about starting a limited liability company or a different business entity in Washington, the District of Columbia consumer and regulatory affairs have an online service center that provides consumer compliance information and forms.
Employer Identification Number (EIN)
For federal tax purposes, you will need an Employer Identification Number (EIN). This is a nine-digit number that identifies your LLC as a business entity. You can obtain an EIN by filing Form SS-4 with the Internal Revenue Service.
You can also apply for one online through consumer affairs if you file consumer compliance forms annually.
Why is an Employer Identification Number necessary? An EIN is required to:
- Open a business bank account
- File and manage Federal and State Taxes such as sales tax and income tax
- Hire employees
If you wish to hire individuals to work for your LLC, you will need an EIN in addition to filing consumer compliance forms with consumer affairs.
This is because the Washington District of Columbia doesn't recognize LLC members as employees and if the LLC hires employees who are not members, consumer affairs must be notified of consumer compliance responsibilities.
Business Licenses
You must then obtain a basic business license and other permits applicable to your LLC. Consumer compliance forms can be filed and license fees can be paid with consumer affairs.
Register with Office of Tax and Revenue
A consumer affairs consumer compliance registration is separate from tax registration.
To register with the Office of Tax and Revenue, file a D-4 Business Registration Application through consumer affairs.
Before applying for a consumer compliance license, check whether your business needs to file sales taxes or other business licenses with the Office of Tax and Revenue.
Registering for consumer compliance does not exempt you from other D.C. tax obligations, including sales taxes or registration with the Office of Tax and Revenue.
You must file your consumer compliance forms annually to continue operating your Washington D.C LLC in good standing with consumer affairs.
Step 6: File Biennial Reports
Unlike most states, an LLC in Washington DC is required to file a biennial report with the Corporations Division before April 1st.
The report along with a $300 filing fee, must be submitted to keep the limited liability in good standing with the state.
The biennial report must contain the following information:
- Name of the company
- Name of registered agent and contact information
- All business conducted within the past two years
- Managing members and their contact information
- Certificate of good standing
Things To Consider After Forming Your Washington DC LLC
There are several important things to consider after forming your Washington DC LLC.
Separate Your Personal and Business Assets
When your personal and commercial accounts are linked, the legal principle of piercing the corporate veil applies.
Essentially, your personal assets become vulnerable if there’s no separation from the finances of the company.
You can start protecting your Washington DC LLC with these steps:
1. Open a Business Checking Account:
- Separates your personal assets from your company's assets, which is critical for liability protection
- Makes bookkeeping and tax preparation simpler
2. Get a Business Credit Card:
- Separates personal and business expenses.
- This is the first step in building a company credit history. It'll help you get funding (e.g., small business loans) later on.
3. Hire a Business Accountant:
- Transforms your bookkeeping process into an effective method to manage and report income, expenses, tax deductions, and other elements of the accounting cycle.
- Makes keeping track of finances and paying employees easier, allowing you to focus on your expanding company.
- Manages your business financing more effectively and professionally.
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FAQs
How Much Does It Cost to Start Washington DC LLC?
It costs $300 to start a Washington DC LLC. The amount covers registration and license fees, as well as filing consumer compliance forms.
What Do I Need to Get a Washington DC LLC?
You need the required documents such as Articles of Organization, registration forms and necessary licences to get a Washington DC LLC.
How Long Does It Take To Form a Washington DC LLC?
It takes about 10 business days to form a Washington DC LLC.
Where Do I Get an EIN?
You can get an EIN by filing with the Internal Revenue Service online or by phone.
Can I Be My Own Registered Agent?
You can be your own registered agent in the District of Columbia, as long as you are of legal age and in good standing with the state.
When Do I Form a Foreign LLC in the District of Columbia?
You form a foreign LLC in the District of Columbia if your limited liability company was formed in a different state and provides consumer services in Washington DC.
Starting an LLC in Washington DC
Starting an LLC in Washington DC involves following certain steps and submitting the required documents.
You have the option to employ an online service provider to help you with the formation process. ZenBusiness will help your LLC to remain compliant with the state.
References:
- https://code.dccouncil.gov/us/dc/council/code/sections/29-103.02
- https://dlcp.dc.gov/sites/default/files/dc/sites/DLCP/publication/attachments/DLC-1
