Forming an LLC (Limited Liability Company) in DC is easy and affordable. The following are few easy steps on how to start an LLC in Washington DC. LLCs form in two ways, domestic or foreign. Suppose you plan to set up an LLC in states other than Washington DC; visit How to Start an LLC for a quick list of the states.
On this page, you’ll learn about the following:
- How to Start a the District Of Columbia LLC
- After Starting your District of Columbia LLC
- Why an LLC in the District of Columbia
- Best Businesses in the District of Columbia
- District of Columbia LLC Formation Review
How to Start a the District Of Columbia LLC
Suppose you’re planning to invest in some profitable business where you won’t have to put your personal assets at risk. Maybe you have a prospective business or corporation that you want to set up in Washington DC. In that case, forming an LLC in Washington DC is the simplest option for you.
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on How to Start an LLC in Washington DC.
Step 1: Decide a Name for Your LLC
If you are to start an LLC in Washington DC, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Take note, however, that any successful business started with coming up with a name. Thus, you have the option to choose a name that complies with the Washington DC business naming requirements. It must also be easily searchable for potential clients.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.
Here are some of the major benefits of choosing the best LLC names.
- Helps establish a company’s presence in the market;
- Creates a new identity that will resemble your LLC;
- Allows ease in finishing your LLC registration process;
- You can get the EIN once you have your name registration certificate
What are the requirements when deciding a name for your LLC?
A name search is vital to make sure your business’ name is unique. Check the availability of your name with the DC CorpOnline platform. You must create an account for you to access the features of the platform. This is where most of your filing of forms will take place.
- Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
- You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
- As for a business website and your URL name, check if your name is still available for domain use with NameCheap.
Reserve a business domain
Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.
If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.
Step 2: Assign a Registered Agent in the District of Columbia
A registered agent for service is your authorized person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Washington DC. Choosing Washington DC-registered agents for your LLC is required.
Make sure your registered agents are residents of Washington DC. It could also be a business. Here are the recommended agents:
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$49 + State Fees
$299 + State Fees
$399 + State Fees
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Washington D.C. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years and they know all the processes for filing services and government filings that follow related district laws, district taxes, and federal LLC tax filing requirements.
Step 3: File Articles of Organization in the District of Columbia
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Washington DC Secretary of State, which incurs a $220 filing fee. You may file them online or by mail.
This Certificate of Formation is a legal document among the list of legal forms needed to form your business officially. It will indicate details about your LLC in Washington DC, like if it is a member-managed or managers-managed.
Before you start filing your forms, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Washington DC LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Create a profile so you can file your Articles of organization. Once you have an account, then search for the Articles of Organization online form and fill it out.
How to File by Mail
If you prefer filing tangible forms for your Washington DC LLC registration, then you can download the Washington DC Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature.
Step 4: Create Your District of Columbia LLC Operating Agreement
An operating agreement is an internal document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
Starting an LLC in Washington DC does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve our Washington DC LLC later.
Step 5: Filing a District of Columbia LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for taxation filing and to determine tax classification options as well as business funding options.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
After Starting your District of Columbia LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a business bank account and business credit card
- File the business permits & business licenses and other professional licenses
- Get liability for business liability insurance with coverage for employees
- File a District of Columbia LLC annual report or biennial report
- Already existing LLCs that wish to operate in the District of Columbia must register as a foreign Washington D.C.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Why an LLC in the District of Columbia
Starting an LLC or any type of business in the District of Columbia, also known as Washington D.C., will be profitable for small businesses. With a capital investment of $3.36 billion, Washington D.C. has become one of the strongest economies in the United States. Being the capital city of the United States, D.C. offers many benefits to the businesses while they start their LLCs in Washington, D.C.
There are a series of tax benefits provided by the state government to the LLCs and new businesses. Following are the tax incentives one can expect –
- Job and employment opportunity benefit of $15,000 per year
- Tax benefits up to 10-years for using personal property to operate your LLCs in the state.
- First 5-years no corporate franchise tax to be paid. From the 6th year, it would be a 6% annual rate.
- No tax on the real property up to 5 years
Main Street Programs
In Washington DC, there are some comprehensive programs which are called Main Street Programs. Under this program, traditional businesses are encouraged to revitalize again. Any new LLC registered in the state can enjoy these programs’ benefits if they are involved in DC’s traditional businesses. Georgetown, Eastern Market, North Capitol are some of the main street programs.
Loans and Grants for Small Businesses
Another reason for starting an LLC in Washington DC is the loans and grants the state government provided to the small businesses. Some of the important loans and grants programs are as follows –
- On the Job Training Program – Under this program, up to 75% of the total wage paid to the trainees can be reimbursed. Up to 1040 hours can be reimbursed under this program. Any new LLC can register under this OJT program if they have a size of a minimum of 100 employees.
- Anacostia Economic Development Corporation Program – The program, initiated by the AEDC, is administered for small businesses. Under this program, if the LLCs are involved in facade improvement projects, they can get up to 75% of the project’s total capital cost.
- The Community Development Financial Institute Program – This program is designed to improve financial institutions and structures in the state. The government has already spent $2.3 billion on this program. They provide loans and grants to small businesses to improve the financial structure of the state.
Best Businesses in the District of Columbia
If you want to form an LLC in the District Of Columbia, then you possibly have a business idea in your mind. If not, then you should look at the best options available below.
If you look around in the District of Columbia’s industries, many people are fond of using showcases and furniture made of old and recycled materials. If you think you have some extra innovative skills, you can enter the recycled materials business and make products out of waste. If people start liking what you are offering, you can charge according to your skillset and maybe more.
Environmental Friendly Product Business
District of Columbia’s residents keep extra care of the environment. Their love for the environment can be easily seen through the products they are using. That is why there is a huge scope of starting the business if environmentally friendly products. All you need to do is find the best products in the market and start the business.
The next business that is rising in the District of Columbia is subscription-related businesses. Every month there is a growth of 1% in subscription-based businesses. That is, there is a never-ending demand for subscription-based businesses. The subscription may be related to anything like food, accessories, etc. You have to select the niche in which you have the maximum interest and earn the maximum profit.
The next business that is gaining massive popularity in the District of Columbia is legal services. It is the capital state of the United Nations of America due to which the legal work in the state is at the peak and also the demand for a reliable legal services business. That is why to enter the business; you need to offer value to your legal clients and see how your business booms.
Here are businesses with some low investment
- Breweries business
- Nursery Farms
- Online advertisement business
District of Columbia LLC Formation Review
Time needed: 30 minutes.
Just to recap, here are the easy steps again when forming a Washington DC LLC. Click on the steps in this list to read the full detail.
- Name your District of Columbia LLC
The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Choose a registered agent
In the District of Columbia, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.
For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.
The cost to form an LLC varies per state.
Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here.
This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.”
>Do not include words that could create confusion between your LLC and any government business.
>Words like ‘bank, attorney, university’ are restricted as well.
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.
Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.
As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website.
No. Never mail these documents or payments to the Secretary of State directly.
The reason you might need an E.I.N. is that it would help for three reasons:
>to open a business bank account
>to file and manage federal and state taxes
>to hire employees or agents
You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
International EIN applicants do not need an SSN to get an EIN.