How to Start a Business in the District of Columbia
With its universities and government and private research institutions, the District of Columbia (DC) offers businesses great opportunities in retail, technology, tourism, and a range of other industries. DC offers unique opportunities for federal contracts and tourism, and many businesses have their headquarters in DC to be close to the federal government.
DC's inclusive economy and ease of entry have enabled companies of all sizes to flourish in the state. Apart from its strong tourism pull, DC has benefitted from significant investments in its businesses, schools, and public spaces, cementing it as one of the nation's most vibrant destinations for business, shopping, and culture.
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How to Start a Business in DC — Free Checklist
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The District of Columbia offers new businesses a steady economy, a wide pool of potential customers in the form of the many government agencies concentrated in the state, and a booming tech market.
The legalities involved in starting a business in DC are simple to achieve, thanks to its one-stop business and tax portals that help you to register for every license, permit, and certification you need all at once. Follow our detailed step-by-step guide below to cover all your bases when starting your business in DC.
Form your business.
Review DC formation options.
DC offers five ways of forming your business. Review these closely and pick the one that fits your business best.
Name your business.
Business names in DC should be unique and distinguishable from other DC businesses. You will need to check with the Department of Consumer and Regulatory Affairs (DCRA) whether your name is available. The DCRA is responsible for regulating all construction and business activities within the state.
To check name availability, do a business licence verification search. If your preferred name is available, you can reserve it for 120 days through the DCRA website.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Take a look at our step-by-step guide to naming your DC business, checking name availability, and reserving your business name for more information.
Get an employer identification number.
Nearly all businesses will need to register for federal taxes by applying for an employer identification number.
Register your business in DC.
DC businesses need some form of business license. The basic option is a Basic Business License (BBL), which you can register for online through the DC Business Center and will take 30 days to be issued.
The business center's wizard will guide you through starting your business and will tell you what licenses you will need. However, the wizard does not deal with specialized business licenses, such as special events and vending licenses, occupational and professional licenses, or licenses issued by organizations other than the DCRA.
As an example, we completed the wizard using a bakery LLC and were told that we will need:
- Articles of Organization.
- Certificate of Trade Name.
- Form FR-500 through the Office of Tax and Revenue.
- Certificate of Occupancy.
- Inspection and approval documents from the Department of Health.
- Bakery Basic Business License.
- Weights and measures certification.
The wizard also noted the addresses, phone numbers, and web addresses of each department where we would need to go to collect each license.
Click on "Start Wizard." It takes about 15 minutes to complete the wizard, and you can log off and carry on later.
Read through the information carefully, particularly the list of business licenses not included in the wizard, and click "Continue Wizard" when ready.
Enter a name and your email address, and take note of the ID number so that you can go back to your session if you need to log out.
If you're not sure what licenses you will need, you can select the Detailed Wizard. If you know what licenses you will need, select your industry from the list and continue.
When selecting the Detailed Wizard, you will be asked a series of questions about the business activities you plan to conduct. Answer all questions and click "Next."
In the next step, the wizard will tell you whether or not you need a physical location. If so, you will need to add that to your list to look for later.
The next step deals with you corporate structure. Answer the questions that the wizard asks and select your preferred organization type to complete the wizard.
You will now receive a personalized checklist detailing all the licenses, certificates, and tax forms you will need.
Obtain necessary permits and licenses.
As noted above, the DC Business Center wizard will provide you with a checklist of exactly which licenses, certificates, and permits you will need for your specific business. In general, though, all businesses need a business license, local and federal tax registration, a Certificate of Occupancy or a Home Occupation Permit, and a business, occupational, and professional license.
You can use the DCRA portal for more information on the various licenses.
Register your business for taxes.
Register for state taxes.
DC's Office of Tax and Revenue provides an online service center for new business registration filing services. In general, businesses selling a product will need to register for sales tax, and businesses hiring employees need employee withholding insurance tax and state income tax.
Doing a New Business Registration with the Office of Tax and Revenue will allow you to register for sales and use tax, specialized sales tax, street vendor tax, ballpark fee tax, personal property tax, and sports wagering tax when registering with your Social Security Number or Individual Taxpayer Identification Number. To be eligible to register for all other tax accounts, you will need to use your Federal Employer Identification Number.
Hire employees and comply with state requirements.
Report all newly hired employees to the state.
By law, all newly hired, as well as re-hired employees must be reported to the District of Columbia New Hire Reporting Center within 20 days of their hire date. If submitting electronically, you must report your new hires in two monthly transmissions no more than 12 to 16 days apart. You will need your FEIN and your email address to register.
Obtain workers' compensation insurance.
Businesses that employ one or more workers are required to have workers' compensation insurance in DC. You can apply for workers' comp through an insurance agent or a licensed insurance carrier, such as The Hartford.
Display state-mandated workplace posters.
DC requires employers to post six Labor and Employment documents in the workplace:
- Equal Employment Opportunity.
- DC Family Medical Leave Act.
- DC Parental Leave Act.
- Protecting Pregnant Workers Act.
- The Right to Breastfeed.
Employers are also encouraged to put up the following posters:
- Non-Discrimination in Public Accommodations.
- LGBTQ Diversity in Workplace.
Some of these posters are also available in Spanish, and you can find all of them for free on DC's Office of Human Rights website.
DC Business Types:
1. Limited Liability Company (LLC).
A DC LLC is an unincorporated business made up of one or more domestic or foreign members where the members only risk their business investment and not their personal assets. LLCs may be run by only one member or owner, but all owners are taxed on their business income. LLC owners must file articles of organization form DLC-1.
2. Corporation.
DC S and C-Corporations are for-profit businesses that are required to issue stock shares. The shareholders are protected from personal liability but may be double-taxed. Corporations can be registered by filing articles of incorporation form DBU-1.
3. Nonprofit Corporation.
DC not-for-profit businesses have no owners and give no income, but are protected against personal liability. They may also be exempt from taxes. Nonprofit corporations must file articles of incorporation form DNP-1.
4. Limited Partnership (LP).
DC limited partnerships (and limited liability limited partnerships) are made up of one or more general partners and one or more limited partners. General partners are personally liable for the business while limited partners are only liable for their business investments.
However, they also do not have any formal control over the business, unlike general partners. LPs are generally taxed on personal profits and must file a statement of qualification form DLP-1.
5. Limited Liability Partnership (LLP).
DC's LLPs are made up of general partners, with no limited partners present. Each partner has equal control over the business and has limited legal liability. LLPs must file a statement of qualification form DLLP-1.
DC Registration and Business Fees:
Fee Type | Cost |
|---|---|
Trade Name Registration | $55.00 |
Articles of Organization (LLC) | $99.00 |
Articles of Incorporation (Corporations) | From $99.00 |
Articles of Incorporation (Nonprofits) | $80.00 |
Articles of Conversion (Professional Corporations) | $99.00 |
Certificate of Limited Partnership | $99.00 |
Expediated 3-day Service | +$50.00 (in addition to filing fees). |
Expediated Same-day Service | +$100.00 (in addition to filing fees). |
Basic Business License | $70.00 |
Certificate of Occupancy/Home Occupation Permit | From $75.00 |
District of Columbia Business Search
FAQs:
How much does it cost to register a business in DC?
The majority of the business formation fees in DC cost $220.00, while the Basic Business License will cost you $70.00.
What permits do I need to start a business in DC?
In general, all businesses need a business license, local and federal tax registration, a Certificate of Occupancy or a Home Occupation Permit, and a business, occupational, and professional license.
Is DC a good place to start a business?
Yes. DC's inclusive economy and ease of entry have enabled companies of all sizes to flourish in the state.
How do I start a business in DC?
How much does it cost to start an LLC in DC?
It will cost $417.60 to start an LLC in DC, including fees for filing your articles of organization, trade name registration, Basic Business License, and the Certificate of Occupancy or Home Occupation Permit.
How much does it cost to get a business license in DC?
A Basic Business License costs $70.00 in DC.
How do I get a sellers permit in DC?
You can register for your sales tax permit in DC by doing a New Business Registration with the Office of Tax and Revenue.
Do I need to register my business in DC?
All DC corporations, partnerships, and LLCs are required to be registered with the DCRA. You can register online through the DC Business Center. The business center's wizard will guide you through starting your business and will tell you what licenses you will need.
Do I need a DC business license?
Yes. All businesses in DC require some sort of business license, which is generally the Basic Business License.
How long does it take to get a business license in DC?
It can take up to 30 days for a business license to be issued in DC.
What is the DCRA?
The Department of Consumer and Regulatory Affairs (DCRA) in the District of Columbia is responsible for regulating all construction and business activities within the state.
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