Annual Filing Requirements for District of Columbia LLC

Learn about the D.C. LLC’s annual report and tax filing procedures.

If you wish to create and maintain a limited liability corporation (LLC) in the District of Columbia (Washington D.C.), you’ll need to prepare and submit a number of paperwork with the state. This article discusses the most essential continuing reporting and state tax filing obligations for DC LLCs.

Annual Report

Your LLC must submit a biannual report with the District of Columbia. The first biannual report is due on April 1st of the calendar year following the year in which your LLC was created. Subsequent biennial reports are due on April 1 of each subsequent calendar year. Your biannual report may be filed electronically at the DCRA website or in person at the Business License Center. The filing cost is now $300. Late reporting are subject to a $100 penalty. Reports submitted in person are subject to an accelerated processing fee.

State Corporate Taxes

Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income taxes by default; only its members do.

The District of Columbia, on the other hand, levies a separate franchise tax on some LLCs. Unincorporated firms having gross revenue of more than $12,000 from D.C. sources that are not otherwise exempt are subject to the tax. Typically, the tax is determined as a flat rate of taxable income. There is also a minimum franchise tax of $250. Form D-30 is used to pay the tax to the Office of Tax and Revenue (OTR). If your tax year corresponds to the calendar year, your tax is payable on April 15.

In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Corporation income is taxed in the District of Columbia, as it is in practically every other state. This is done in the District of Columbia via the business franchise tax and a modest set of marginal tax rates applied to taxable income. You must pay this tax if you have elected to have your LLC taxed as a corporation. To pay the tax, use the OTR’s company franchise tax return (Form D-20).

Employer Taxes in the State

Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) Employers in the District of Columbia, however, must additionally pay state taxes.

To begin, you must withhold and remit employee income taxes to the Office of Tax and Revenue. Begin by registering your company with the OTR, either electronically (through the Electronic Taxpayer Service Center (eTSC)) or on paper (via Form FR-500, Combined Registration Application for Business DC Taxes/Fees/Assessments). Following registration, you must submit withholding taxes on a regular basis (for example, monthly or quarterly) using the relevant version of Form FR-900. In addition, you must complete an annual reconciliation of your LLC’s tax withholding using Form FR-900B.

You’ll also need to register to pay state unemployment insurance (UI) taxes. The DC Department of Employment Services is in charge of these taxes (DES). These taxes may be registered for online or on paper (Form FR-500). Then, each quarter, utilize Forms UC-30 to record your salary and pay your unemployment insurance taxes.

The sales tax

If your LLC sells items to clients in the District of Columbia, you must collect and remit sales tax. This implies you’ll need to register with the OTR for this purpose and then make periodic sales tax payments for products sold. You may sign up online or by mailing Form FR-500. Then, on a regular basis (such as monthly or quarterly), you must file sales tax reports with the OTR.

Other States Registration

If you want to do business in states other than the District of Columbia, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.