Setting up a new business is one of the most exciting steps you can take in launching your new career or side hustle. The endless possibilities are matched only by the anxiety you probably feel in figuring out how to set up your LLC (limited liability company). Of course, that probably leads you to the question, “How much does an LLC in DC cost?”
Establishing an LLC in Washington, DC can be difficult if you don’t know what you’re doing. That’s the bad news. The good news is, it doesn’t have to be that expensive. As long as you understand the basic steps, you’ll likely find it easier than you think.
So just what are those steps and costs? What kind of filing fee are we talking upfront? What do the annual fees look like? Should you use a registered agent service, and if so, what will it cost you?
In this post, we’re going to answer those questions. We’ll look at the specific costs for different requirements and services needed when setting up an LLC in DC. We will also tackle one of the most commonly raised issues: whether you need a registered agent. Let’s get started.
Forming an LLC in the District of Columbia is a multi-step process, with fees attached to many (but not all) of the steps. Instead of feeling overwhelmed, just follow the step-by-step process we’ve outlined here.
Picking a name is one of the most exciting parts of your business, but it’s also one of the most stressful. You want a name that is:
Once you have a general idea of the direction you want to take, you should perform a free name search using CorpOnline to ensure your District of Columbia LLC name isn’t already being used.
Make sure you name your business according to DC’s rules, which say that you must append “LLC” to the end of your business, unless it is a profession (attorney, architect, doctor, dentist, etc.), in which case you must add “PLLC.” If you fail to do this, your LLC may not get approved.
In some cases, you may wish to do business under a different name than your LLC. This is useful when you want a very clear LLC name, e.g. Your Name LLC, but want your business to have a more fun one, e.g. KidsJump for a trampoline center. In that case, you want to file a DBA, or “doing business as,” also called a trade name in DC.
This is also useful when you want to operate multiple arms of a business under one LLC, so that you account for income and get taxed the same. In that case, you might have a DBA named KidsJump and another named KidsWear, for instance. The cost of filing a trade name is $55.
Either way, you have the option of reserving your LLC name if you know what you want but aren’t yet ready to file your articles of organization. The cost for doing so is $50.
The cost for filing articles of organization, the paperwork that makes your LLC official, is $99 in Washington, DC. This may be referred to as the LLC filing fee or the articles of organization fee, but they are the same thing.
All entities who are registered to do business in Washington, DC are expected to file a free beneficial ownership information report with FinCEN. This is a newer federal requirement that may impact your ability to do business in DC if you fail to file it.
If you’re feeling a little beside yourself at the amount of work to do so far, take heart: There is another option. Of course, you can do all of the above steps by yourself, and many people do.
However, if you don’t feel up to it, you might want to hire a registered agent. A registered agent is a professional who receives business mail on your behalf, understands the business reporting and fee requirements, and can help you assemble your paperwork in a timely fashion.
Registered agents can also help you make sure you are always in compliance.
A registered agent service can also help you gain a better grasp of the fees and expenses you should expect throughout the lifetime of your business. Considering a registered agent costs somewhere between $100 and $600 a year (and only $199 here at Tailor Brands!), it’s a reasonable price to pay for relieving a great deal of stress.
You do not need an operating agreement to open your LLC at an official level. However, you will need one to open a business account in DC, so you have to create one and keep it on file internally.
You can use a lawyer or a registered agent to create an operating agreement, or you can do it yourself. If you take the DIY approach, it will cost nothing, but beware that it is an exacting document. If you use a lawyer, the cost can be up to $1,000.
Any LLC that wishes to operate in DC must register with the Office of Tax & Revenue. While there is no charge for this, you must fill out FR-500 using either your federally issued EIN (employer identification number) or your social security number.
Overall, setting up an LLC in the District of Columbia is fairly affordable. However, there are a few items on the LLC DC cost list of which you should be aware.
In addition to the 21% federal corporate income tax, you will pay a state-level franchise tax. To calculate your tax, you multiply your net income by .0825 (equivalent to 8.25% of your income).
However, it’s not a straight income tax, but rather a franchise tax. This means there is a minimum rate you must pay, as follows:
If you are not a math fan, no sweat; taxes confuse most people. A registered agent can help you ensure you collect all the necessary documents so that you report the right income when tax time comes.
The business licenses and permits you need vary widely depending on your business. You may need:
The best way to determine what you need is to check with your professional organization or speak with a knowledgeable registered agent.
Whereas many states require an annual report to impart information on the standing of their LLC – including about the owners, the income, and the business activities – DC only requires you to submit one every 2 years.
The report must be submitted by April 1st within the first year the LLC is created, then every other April 1st after that. It costs $300 to file, with a $100 late fee if you miss the deadline.
Note that nonprofits pay an $80 filing fee for the report, but there are lots of rules for being a nonprofit LLC and it’s usually not the best way forward for your business.
A certificate of good standing is not required for all businesses, but it is for some, depending on the activities you’re planning. This can include:
… and a number of other activities. As such, it’s almost certainly a necessity for those operating a business in DC. The cost is $25 and can be completed online in just a few minutes.
The good news is that many LLC formation costs are deductible on your federal taxes. These include filing your articles of organization, DBA fees, costs associated with operating agreements and registered agents, and so forth.
You can often also deduct:
It’s not always easy to stay on top of every cost involved with forming an LLC and keeping it in good standing every year thereafter. That’s why we’ve created a handy chart for you here, so make sure to bookmark this page in your browser for future reference!
LLC filing fee (articles of organization) | $99 |
Reserve business name (optional) | $50 |
Filing a DBA (optional) | $55 |
Certificate of good standing | $25 |
Registered agent (optional) | $100 to $600 |
Business license (cost varies widely by profession; see examples) | Caterer: $349 Pet shop: $485 |
Operating agreement (optional) | $0 to $1,000 |
Franchise tax | 8.25% of income Minimum $240 if your gross receipts are under $1 million and $1,000 if they are over $1 million |
Biannual report | $300 |
Biannual report late fee | $100 |
Expedited service (optional) | $100 for same day $50 for 3-day |
Amendment or restatement of certificate of organization | $220 |
Statement of dissolution | $220 |
While establishing an LLC in DC isn’t cheap, per se, it’s absolutely doable if you … well, know what you’re doing. Budget accordingly, get help where you need it, and good luck with your new venture!
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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