Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This tutorial will bring you through the steps of registering your company in Washington, D.C.
Establishing a Business in Washington, D.C.
1. Give Your Washington, D.C. Business a Name
There is one crucial step you must do before registering your new business: you must choose a name. While naming your new company may seem simple on the surface, it is really one of the most important and time-consuming activities you will do throughout the business launch process.
Your company’s name should be unique and capture customers’ attention, but it also conveys much more. It should provide a clear message about the things you sell and/or the services you provide. The name of your firm exposes the public to your brand and may convey a message about your company and what it stands for.
Considering Your Name
While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.
Name Lookup in Washington, D.C.
The DC Company Center in Washington, D.C. features a business lookup tool that allows you to search for business entities by name and license type. To use the search tools, you must have a CorpOnline account. You should also make sure that your name isn’t too similar to any other businesses in the area. This will assist to prevent future misunderstanding and legal problems.
It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. The next processes may differ based on your company structure and the regulatory requirements of DC. The next section will go through the various company structures.
If you decide to utilize a “doing business as” (DBA) name, also known as a trade name in Washington D.C., our DBA guide will assist you in ensuring that you are legally registered at the district level. There are several advantages to registering your business name with the district. It provides further protection against competing Washington, D.C. enterprises, establishes your company’s validity, and may be needed by certain suppliers, banks, and lenders.
2. Select a Business Structure for Your Washington, D.C. Company
Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.
The sole proprietorship
A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need a district filing.
Though sole proprietorships normally operate under the owner’s surname, you have the option of registering a trade name. The cost of registering a DBA with the Department of Consumer and Regulatory Affairs in Washington, D.C. is $55 and must be updated every two years.
While you are not required to register your single proprietorship with the district, bear in mind that Washington D.C. requires all companies, including sole proprietorships, to get a business license.
Partnership
A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.
Some partnerships, including limited partnerships and limited liability partnerships, must submit formal papers with the Department of Consumer and Regulatory Affairs in Washington, D.C., along with a filing fee.
LLC
If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.
Washington, D.C. requires all LLCs to choose a registered agent who will receive legal paperwork on the organization’s behalf. Your registered agent must be a qualified Washington, D.C. resident or a company allowed to do business in Washington, D.C. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.
Washington D.C. also needs you to meet specific name rules and submit the Articles of Organization, which include important information about your business.
Corporation
A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.
Corporations, like LLCs, must designate a registered agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your registered agent, like an LLC, might be a professional service, a corporate organization, or a person.
You must also submit the Articles of Incorporation with the district in addition to obtaining a registered agent.
3. Determine whether your company has to be registered in Washington, D.C.
After you’ve decided on your official company structure and registered your new business name, you should check with the district to see what the business registration requirements are. Each state has its own set of rules, which must be strictly followed.
Most informal business arrangements, such as sole proprietorships and general partnerships, do not need to be registered with Washington D.C. They may, however, be required to register for a business license. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.
Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.
Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.
Aside from personal protection, LLCs have various additional advantages, including:
Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.
If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.
4. Register for Business Taxes in Washington, D.C.
EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.
After you have formed your company and obtained your EIN, you must register for district taxes with the Washington D.C. Office of Tax and Revenue. Complete the combined business application for business taxes on the MyTax DC website (Form FR-500). In addition to that form, you must register for withholding tax and unemployment insurance tax.
If your company intends to sell goods, you must collect sales tax. You may need to register for extra taxes, such as specialty sales tax or sports wagering tax, depending on the nature of your company. For further information, go to the website of the Office of Tax and Revenue.
5. Obtain Permits and Licenses for Your D.C. Business
Most enterprises in Washington, D.C. will need a business license. The Basic Business License (BBL) is based on the products and services offered by your company. The filing requirements and processes for regulated firms in the district will vary. The website of the Washington D.C. Department of License and Consumer Protection has a list of business licensing categories that you may use to choose which application method is ideal for your company.
Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.