You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Washington, D.C.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common District of Columbia startup fees here.
Bare Minimum Cost to Start an LLC in Washington, D.C.
Optional: LLC Name Reservation Fee
- $50, file online, by mail, or by hand
Optional: LLC Formation Service
- $49 for an LLC service like ZenBusiness and $79 for LegalZoom
Required: Articles of Organization Fee
- $220, filed online, by mail, or by hand
Need Help Forming an LLC?
|LegalZoom||$79 + state fee||Brand||Fair||Yes|
|🥇 ZenBusiness||$49 + state fee||Overall Value||Excellent||Yes|
As a business owner, you have so much to think about. Let an LLC service take care of the formation paperwork so you can sleep easy knowing everything is totally taken care of.
ZenBusiness has formed over 300,000 businesses, is reliable, fast and affordable. Not to mention $30 less than LegalZoom!
Overall Washington, D.C., LLC Formation Costs
LLC Name Reservation Fee
Let’s say you still have some paperwork to figure out before officially starting your LLC, but you have an amazing name in mind. In cases like this, a name reservation could be beneficial. Reserving a name is optional, but it can help provide peace of mind while you work out your LLC formation details. A District of Columbia name reservation gives you a 120-day hold on your name, and it’ll set you back $50.
To clarify, most jurisdictions don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Business Domain Name & Website
To properly brand your business, you’ll want to acquire the domain name so nobody else can use it. Search for and find the perfect one through GoDaddy for just $4.99.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your District of Columbia LLC. Your LLC isn’t officially recognized by the district until you’ve successfully filed your Articles of Organization. Whether filing online, by mail, or in person, the Articles of Organization will cost you $220. What’s nice is that this is a one-time fee. You won’t have to pay it again during the life of your business unless your initial filing is rejected.
The information you’ll need to file your Articles of Organization includes the official name of your LLC, your LLC’s principal office address, the name and address of your registered agent, the effective date of your LLC formation, miscellaneous provisions (these apply if you’re forming a series LLC or professional LLC), the name and address of every LLC member and/or manager, the name and address of your LLC organizer, the organizer’s signature, and the date.
Every business operating in the District of Columbia needs either the Basic Business License or the General Business License to be compliant with district regulations. Beyond that, certain types of businesses will need professional licenses to operate in compliance with industry requirements. You can find information about all of these licenses and more on the Department of Consumer and Regulatory Affairs website.
Washington, D.C., LLC Formation Service
Starting an LLC in Washington, D.C., can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for a District of Columbia LLC service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness and IncFile) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with D.C. business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you need to change registered agents for a Washington, D.C., LLC, check out our full guide on this topic.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. If you’re considering hiring a lawyer, do some research to ensure that you hire an ideal match for your business. Take advantage of a site like Avvo, a database of attorneys from across the country, sortable by location, rates, specialties, review and more. It’s got everything you need to find the perfect District of Columbia business attorney for you.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Washington, D.C. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another jurisdiction and is now expanding into the District of Columbia. Foreign businesses only need to file the “Foreign Registration Statement,” not the Articles of Organization.
All foreign business entities are required to foreign qualify in D.C., or they could incur some pretty severe penalties. There are two ways to file: online or on paper. Both methods require a $120 fee. This filing is similar to the Articles of Organization in that you’ll only need to file it and pay the fee once, provided it’s accepted by the district.
LLC Biennial Fees
Every other year, your LLC must submit a biennial report with the Department of Consumer and Regulatory Affairs. This is to assist the district in maintaining current and accurate information for all of its businesses. Each biennial report costs $300, so plan that into your budget. Biennial reports are due by April 1.
The information required to file your biennial report includes the date, your LLC’s D.C. filing number, the name of your LLC, the jurisdiction where you originally formed your LLC, your LLC’s principal office address, the name and address of your registered agent, a description of the nature of your LLC’s business, and the name and address of each LLC member.
For more information on D.C. biennial reports, check out our full article on this topic!
The way that LLCs are typically structured, they do not have to pay taxes to the federal government. Only its individual members do. However, the District of Columbia assesses a business franchise tax that amounts to 8.25%. If your business generates less than $1 million in D.C.-based business, you will instead pay the $250 minimum rate.
Additionally, there are certain circumstances that would make your LLC subject to other business-related taxes. If you hire employees, for example, your LLC may have to pay income and unemployment taxes, and if your LLC sells merchandise, it will likely owe a sales tax.
What if I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
If you fail to pay your franchise taxes, file your biennial reports, or pay your filing fees, you could lose your good standing with the district. This includes many potential fines and fees, and you might lose your ability to foreign qualify in other states, among other penalties.
A company that remains noncompliant risks being dissolved by the district. It’s possible to reinstate a dissolved LLC, but you’ll have to resolve all of your outstanding filings and fees and pay an additional reinstatement fee.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in the District of Columbia.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like biennial reports and franchise taxes — so your business doesn’t fall out of good standing.
Key Steps for Starting a Washington, D.C., LLC
- The first step to forming a D.C. LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the district’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in the District of Columbia, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $220 fee. Once the district processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for D.C. LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the D.C. Office of Tax and Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal and district governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the District of Columbia!
Key Steps for Maintaining a D.C. LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, biennial reports are a key component of LLC maintenance in D.C., and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Washington, D.C.
What are the business tax rates in the District of Columbia?
The District of Columbia assesses a business franchise tax that amounts to 8.25%. If your business generates less than $1 million in D.C.-based business, you will instead pay the $250 minimum rate.
How quickly does D.C. process LLC formations?
If you submit your Articles of Organization online or by mail, the district will process your documents within 15 business days. Hand-delivered documents are processed while you wait, although you will need to pay an additional fee. There are also expedited options available if you need to speed things up for your online or mail filing: an additional $100 for one-day processing or $50 for three-day processing.
How many small businesses are there in the District of Columbia today?
Washington, D.C., is home to nearly 40,000 small businesses. Entrepreneurs of all backgrounds and business types find that the District of Columbia is a great place to own and operate a small business.
What are the top small business resources and websites in D.C.?
The District of Columbia chapter of the Small Business Development Center is a great place to start. You will also find many excellent resources with the Small Business Administration’s Washington Metropolitan Area District Office. The district government also has its own Small Business Resource Center with plenty of valuable tools.
Should I form my LLC in D.C., or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home jurisdiction. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.