Here is an outline of the steps you need to follow in order to form an LLC in the District of Columbia. You should also read the general section on forming an LLC for information that is applicable in any state. The D.C. Bar Pro Bono Program provides a helpful Guide for Business Owners on the Formation of a Limited Liability Company, and you can find additional information on the law governing D.C. LLCs on the D.C. Bar website.
1. Choose a business name for the LLC and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- DC law requires an LLC name to contain the words "limited liability company" or the abbreviation "L.L.C." or "LLC". Additionally, your business name may not contain the words "Corporation", "Incorporated", "Limited Partnership", or the abbreviations "Corp.", "Inc.", or "L.P.", and may not be the same as, or deceptively similar to, that of any other foreign or domestic LLC, corporation, or limited partnership (including registered "fictitious" names).
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Prepare and file articles of organization with the Department of Consumer and Regulatory Affairs.
- The filing fee is $165, including a $150 basic filing fee and a 10% technology fee. The Department of Consumer and Regulatory Affairs website has a sample articles of organization for a District of Columbia LLC -- you basically need to fill in the blanks. The website also has a helpful online registration interface to guide you through the filing process. You can file online by registering for the District's online filing system.
- If the LLC will be managed by one or more managers, rather than all the members together, then you should put a clause saying that in your articles of organization. For general information on articles of organization, see the Articles of Organization page.
3. File a Written Consent to Act as a Registered Agent form with the Department of Consumer and Regulatory Affairs.
- The Department of Consumer and Regulatory Affairs website has the required form for you to fill out.
4. Negotiate and execute an operating agreement.
- The District of Columbia does not require an operating agreement in order to form an LLC, but executing one is highly advisable. There is no set criteria for the content of an operating agreement, but it typically includes topics such as how meetings are conducted, how the company will be managed, what capital contributions are required from each member, and how profits and losses will be allocated. The operating agreement does not need to be filed with the state. Please see the Operating Agreement page for details.
5. Obtain any required local licenses.
- The District of Columbia issues what is known as a Basic Business License (BBL) to new local businesses. The Department of Consumer and Regulatory Affairs website has a helpful Basic Business License Information page, which includes an online interface to help you determine whether you need a BBL.
6. Determine what tax and other regulatory obligations the LLC has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- Register for District of Columbia business taxes using the FR-500 Combined Business Tax Registration service. This service will tell you what taxes you will be responsible for (including income and employment taxes), guide you to what forms you will need to file, and tell you when they must be filed.
- Whenever you hire an employee in the District of Columbia, you must inform both the IRS and the District of Columbia. The IRS details all of the necessary steps to complete, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. Information on what to do on the District level will be detailed when you register for taxes using the FR-500 Combined Business Tax Registration service.
- If you have employees in the District of Columbia, you must carry workers' compensation insurance.
- There may be other informational returns that you may have to file annually or semi-annually with both the IRS and the District. For more information, check out the IRS Guide To Information Returns and the DC Business Resource Center's Report Requirement and Deadline Generator.
- You may be subject to unincorporated business franchise taxes imposed by the District on income earned within the District.
7. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the articles of organization, and a resolution identifying authorized signers if those names are not listed in the articles.
- DC LLCs must file a Two-Year Report with the Department of Consumer and Regulatory Affairs every two years. The filing fee is $150. Note that the first such report is due April 1st of the first year after incorporation, with each subsequent report filed every two years thereafter.
- The District of Columbia also requires LLCs to provide certain information to members or managers. According to D.C. Code Ann. § 29-804.10, in member-managed LLCs, members have the right to inspect and copy business records the LLC maintains that are material to the member's rights and duties. The LLC also generally must provide members any information the company knows concerning its "activities and affairs, financial condition, and other circumstances" that is material to the members' rights and duties, and, if a member reasonably and properly requests it, "any other information concerning the company's activities and affairs, financial condition, and other circumstances." In a manager-managed LLC, a member only has a right to inspect and copy records if the member seeks the information for a reason material to the member's interest as a member, demands the information in writing and describes the information requested and why it is requested with reasonable particularity, and the information sought is directly connected to the member's purpose.