To start an LLC in Washington DC, you’ll need to appoint a registered agent, choose a name for your business, and file Articles of Organization with the Department of Consumer & Regulatory Affairs. You can file the document online, by mail, or in person.
Typical limited liability companies in DC will be assumed to be “member-managed” unless the operating agreement expressly declares that it’s manager-managed using specific language.
Benefits of an LLC in DC
Some of the benefits of converting a corporation to an LLC in DC include reduced liability, increased flexibility in choosing a tax structure, and easier management of the business.
An LLC can help reduce taxes by allowing business owners to deduct business expenses on their personal tax returns. Pass-through entities are usually treated as federal income tax purposes. The company doesn’t pay taxes on business income.
Tax Requirements in Washington DC
The DC business license is usually required for most businesses, except those whose principals are licensed professionals. Obtaining a business license in Washington D.C. is as easy as completing corporate registration and trade name registration, registering your business with the IRS and DC Office of Tax and Revenue, completing registration with the Office of the Zoning Administrator.
DC does not recognize the federal S corporation election and does not require a state-level S corporation election. You can still have an S corporation in DC. The S corporation will only be an S corporation for federal tax purposes and not for state tax purposes.
The DC franchise tax, also known as the DC unincorporated business franchise tax, is a tax imposed on some businesses operating in the District of Columbia that have gross receipts of $12,000 or more.
In DC, LLCs are subject to the District’s unincorporated franchise tax. In addition, income from the LLC is distributed to individual members, who then pay federal and state taxes on the amounts allocated to them.
To start a Washington DC LLC, you’ll need to file the Articles of Organization with the DC Department of Consumer and Regulatory Affairs, which costs $220. You can apply online, in-person, or by mail. The Articles of Organization is the legal document that officially creates your DC limited liability company.