How to Incorporate in Washington D.C.

🎯 DC Entity Selector Tool

Answer a few questions to find the best entity type for your DC business:

🏢 DC LLCs & Series LLCs

Standard DC LLC

Governing law: D.C. Code Title 29, Chapter 8 (Limited Liability Companies)

Formation Requirements

• Document: Certificate/Articles of Organization (DLCP Form DLC-1)
• Filing fee: $99
• Expedited processing: +$50 (3-day) or +$100 (1-day)
• Name requirement: Must include “Limited Liability Company”, “LLC”, or “L.L.C.”
• Registered agent: Required (DC physical address, no P.O. box)
• Management: Specify member-managed or manager-managed

Key Features

• Liability protection: Personal assets shielded from business debts and lawsuits
• Tax flexibility: Default pass-through (partnership) taxation; can elect S-corp or C-corp treatment
• Flexible management: Member-managed (owners run it) or manager-managed (hire managers)
• Operating agreement: Not filed but highly recommended; governs allocations, distributions, management
• Minimal formalities: No required annual meetings or corporate minutes

Ongoing Obligations

• Biennial report: $300, due April 1 every two years (late fee $100)
• Franchise tax: Unincorporated Business Franchise Tax (8.25%) if engaged in DC trade/business, unless personal services exception applies; $250 minimum (<$1M gross) or $1,000 (>$1M gross)
• Basic Business License: Required for most operating LLCs
• Clean Hands: Must have <$1,000 in outstanding DC tax debt

DC Series LLC

How Series LLCs Work

• Structure: One parent LLC → multiple designated series (Series A, Series B, etc.)
• Separate liability: Each series operates as its own entity with liability shield between series
• Single filing: Only the parent LLC files biennial reports ($300 covers all series)
• Cost efficiency: Cheaper than forming 5+ separate LLCs for multiple properties/projects

Formation Process

• Step 1: File DLC-1 (Articles of Organization) with series-authorizing language in the certificate – Fee: $220 (vs $99 for regular LLC)
• Step 2: File DLC-4 (Certificate of Series Designation) for each series you create
• Step 3: Maintain separate records and accounting for each series

Critical Requirements for Liability Shield

• Separate records: Each series must have distinct and separate records
• Separate accounting: Assets of each series must be accounted for separately
• Notice in certificate: Certificate of organization must include notice of series limitation of liability
• Operating agreement: Must clearly define each series, its members, managers, assets, and allocations

Series LLC vs. Multiple LLCs

Best Uses for DC Series LLCs

• Real estate investors: Hold each rental property in a separate series (Series A = 123 Main St, Series B = 456 Oak Ave)
• Product-line businesses: Separate liability for different product lines or divisions
• Asset holding structures: Segregate intellectual property, equipment, real estate
• Franchise operations: Each franchise location as a separate series

When NOT to use series: If you operate in multiple states (liability shield uncertainty), if you need pristine legal clarity (bankruptcy concerns), or if you can’t maintain rigorous separate accounting.

🏛️ DC Corporations

Business Corporation (C-Corp)

Governing law: D.C. Code Title 29, Chapter 3 (Business Corporations)

Formation Requirements

• Document: Articles of Incorporation (DLCP form DBU-1)
• Filing fee:
  • $99 if authorized capital ≤ $100,000
  • $220 if authorized capital > $100,000
• Name requirement: Must include “Corporation”, “Incorporated”, “Company”, “Limited”, or abbreviations (Corp., Inc., Co., Ltd.)
• Registered agent: Required (DC physical address)
• Share authorization: Must authorize at least one class of shares

Key Features

• Strong liability protection: Shareholders, directors, and officers protected from personal liability
• Unlimited shareholders: Can have unlimited domestic and foreign shareholders
• Investment-friendly: Preferred by venture capital and angel investors
• Stock issuance: Can issue multiple classes of stock (common, preferred)
• Perpetual existence: Corporation continues even if ownership changes

Corporate Formalities

• Board of directors: At least one director required (no residency requirement)
• Officers: President, secretary, treasurer (same person can hold multiple offices)
• Bylaws: Internal governance rules (not filed publicly)
• Meetings: Annual shareholder meetings; regular board meetings with minutes
• Stock ledger: Maintain records of all share issuances and transfers

Ongoing Obligations

• Biennial report: $300, due April 1 every two years
• Corporation Franchise Tax (Form D-20): 8.25% on DC taxable income; $250 minimum (<$1M gross) or $1,000 (>$1M gross)
• Corporate minutes: Document board and shareholder meetings
• Annual meetings: Hold and document annual shareholder meetings

C-Corp vs. S-Corp

• C-Corp (default): Corporation pays tax on profits; shareholders pay tax on dividends (double taxation). Unlimited shareholders of any type. Best for venture-backed startups planning significant growth.
• S-Corp (IRS tax election): Pass-through taxation like an LLC. Limited to 100 U.S. citizen/resident shareholders, one class of stock. File IRS Form 2553. Best for small businesses wanting corporate structure + pass-through tax treatment.

Benefit Corporation

Governing law: D.C. Code Title 29, Chapter 13

Formation Requirements

• Articles of incorporation: Must state it is a “benefit corporation” and identify purpose of creating general public benefit
• Filing fee: Same as C-corp ($99–$220 based on authorized capital)
• Optional: Can also specify one or more specific public benefits (e.g., “reduce carbon emissions,” “improve public health”)

Key Features

• Dual purpose: Legally obligated to consider impact on society, environment, employees, suppliers, community – not just shareholders
• Legal protection: Directors protected when making mission-driven decisions that may not maximize short-term profits
• Attract impact investors: Growing pool of investors seeking companies with measurable social/environmental missions
• Transparency: Must publish annual benefit report assessing performance against third-party standard
• For-profit status: Can distribute profits to shareholders (unlike nonprofits)

Annual Benefit Report Requirements

• File with DLCP concurrently with biennial report
• Assess company’s social and environmental performance against recognized third-party standard (e.g., B Lab’s B Impact Assessment, GRI Standards)
• Describe ways company pursued general and specific public benefits
• Describe any circumstances that hindered creation of public benefit
• Make report publicly available on company website or provide to shareholders

Best Uses for Benefit Corporations

• Social enterprises: Fair trade, sustainable products, ethical services
• Mission-driven startups: Clean energy, education technology, healthcare innovation
• ESG-focused companies: Businesses committed to Environmental, Social, Governance principles
• B Corp certification seekers: Legal structure required for B Lab certification
• DC policy-adjacent ventures: Companies working on social issues, policy reform, civic engagement

Benefit Corp vs. Nonprofit vs. C-Corp

Professional Corporation

Governing law: D.C. Code Title 29, Chapter 5

Who Can Form a Professional Corporation

Licensed professionals including:

• Lawyers
• Doctors, dentists, and other medical professionals
• Certified Public Accountants
• Architects and engineers
• Other licensed professions as defined by DC professional licensing boards

Key Features

• Corporate liability protection: Shareholders protected from business debts (but NOT from own professional malpractice)
• Professional licensing: All shareholders, directors, and officers must be appropriately licensed
• Dual regulation: Subject to both corporate law (Title 29) and relevant professional licensing board requirements
• Ownership restrictions: Only licensed professionals in the same or compatible professions can be shareholders

Formation Requirements

• Articles of incorporation designating professional purpose
• Proof of professional licenses for all shareholders/directors/officers
• Same filing fees as business corporation ($99–$220)
• Registered agent in DC

PC vs. PLLC

Professionals can alternatively form a Professional LLC (PLLC) under Chapter 8 (standard LLC law) while maintaining individual professional licenses. Choice depends on:

• Formalities: PC requires more formalities (board, meetings, minutes); PLLC more flexible
• Taxation: PC can elect S-corp or C-corp; PLLC default pass-through (can also elect)
• Licensing board preference: Some DC professional boards have specific requirements or preferences

Nonprofit Corporation

Governing law: D.C. Code Title 29, Chapter 4 (Nonprofit Corporations)

Types of DC Nonprofits

• Public benefit corporations: Charitable, educational, scientific, literary purposes benefiting the public
• Mutual benefit corporations: Benefit members (trade associations, social clubs, homeowners associations)
• Religious corporations: Churches, temples, mosques, religious organizations

Formation Requirements

• Document: Articles of Incorporation (nonprofit)
• Filing fee: $99
• Required provisions:
  • Nonprofit purpose statement
  • No-distribution constraint (assets cannot be distributed to members/directors)
  • Dissolution clause (assets go to similar nonprofit if dissolved)
• Board of directors: At least one director (recommend 3+ for IRS 501(c)(3) applications)
• No share capital: No stock; may have members or be nonmember corporation

501(c)(3) Tax-Exempt Status

Forming a DC nonprofit corporation does NOT automatically grant federal tax exemption. Must apply separately to IRS:

• Form 1023 (large orgs): Gross receipts typically >$50,000/year; $600 filing fee; 50+ page application; 3-6 months processing
• Form 1023-EZ (small orgs): Gross receipts <$50,000/year and assets <$250,000; $275 filing fee; 3-page simplified form

DC Nonprofit Advantages

• Federal hub: Proximity to Congress, federal agencies, policymakers
• Advocacy center: Many national advocacy organizations, NGOs, think tanks based in DC
• Grant ecosystem: Access to federal grants, foundation funding, international development funding
• Talent pool: Policy experts, advocates, nonprofit professionals concentrated in DC

Ongoing Obligations for DC Nonprofits

• Biennial report: $300, due April 1 every two years
• IRS Form 990: Annual information return (990, 990-EZ, or 990-N based on size)
• DC tax exemption: Apply separately for DC tax exemptions with OTR
• Board meetings: Hold regular board meetings and maintain minutes
• Conflict of interest policy: Required by IRS for 501(c)(3) status
• Public disclosure: Form 990 and Form 1023 must be available for public inspection

Restrictions on Nonprofits

• No profit distribution: Cannot distribute profits to members, directors, or officers (can pay reasonable salaries)
• Political activity limits: 501(c)(3) nonprofits cannot endorse candidates; limited lobbying allowed
• Asset lock: If dissolved, remaining assets must go to another 501(c)(3) organization
• Unrelated business income: Subject to Unrelated Business Income Tax (UBIT) if earning income outside exempt purpose

⚙️ Specialized DC Entity Types

Partnerships

General Partnership (GP)

• Formation: Default form when two+ people carry on business as co-owners; no filing required
• Liability: Unlimited personal liability for all partners
• Use cases: Simple co-owned businesses where partners are comfortable with unlimited liability
• Caution: Each partner personally liable for partnership debts and other partners’ actions

Limited Partnership (LP)

• Governing law: D.C. Code Title 29, Chapter 7
• Formation fee: $220 (Certificate of Limited Partnership)
• Structure: At least one general partner (GP) with unlimited liability + limited partners with limited liability
• Use cases: Investment funds, real estate syndications, family limited partnerships
• Biennial report: $300, April 1 every two years

Limited Liability Partnership (LLP)

• Formation fee: $220 (Statement of Qualification)
• Structure: Partnership where all partners have limited liability protection
• Use cases: Professional firms (law firms, accounting firms, architectural firms)
• Liability shield: Partners not personally liable for other partners’ malpractice or negligence
• Biennial report: $300

Limited Liability Limited Partnership (LLLP)

• Structure: Limited partnership where even the general partner(s) have limited liability
• Use cases: Complex real estate deals, sophisticated investment structures
• Formation: File as LP and make LLLP election

Cooperative Associations

Governing laws:

• General Cooperative Associations – Title 29, Chapter 9
• Limited Cooperative Associations – Title 29, Chapter 10

General Cooperative Association

• Formation fee: $80 (Articles of Incorporation)
• Structure: Member-owned and democratically controlled
• Voting: Typically one-member-one-vote (not capital-weighted)
• Distributions: Patronage distributions based on use/participation, not capital contribution

Limited Cooperative Association

• Hybrid structure: Allows both patron members and investor members
• Flexibility: Can raise capital from investors while maintaining cooperative governance
• Use cases: Worker cooperatives needing outside investment, agricultural co-ops, food co-ops

DC Cooperative Use Cases

• Worker co-ops: Employee-owned businesses (restaurants, tech firms, consulting shops)
• Housing co-ops: Resident-owned apartment buildings, community land trusts
• Food co-ops: Member-owned grocery stores, buying clubs
• Consumer co-ops: Credit unions, utilities, consumer services
• Multi-stakeholder co-ops: Workers, consumers, and community members as member classes

Statutory Trusts

Governing law: D.C. Code Title 29, Chapter 12

Overview

• Use cases: Investment vehicles, securitizations, asset-holding structures, sophisticated financial arrangements
• Structure: Trustees manage assets for benefit of beneficial owners (similar to traditional trusts but with statutory framework)
• Flexibility: Highly flexible governance and economic arrangements defined in trust agreement
• Liability: Beneficial owners typically have limited liability (like shareholders)

When to Consider Statutory Trusts

• Real estate investment trusts (REITs)
• Securitization vehicles
• Asset-backed securities issuers
• Sophisticated investment funds
• Family wealth management structures

Caution: Statutory trusts are complex and typically require specialized legal counsel. Not recommended for typical small businesses – use LLC or corporation instead.

Unincorporated Nonprofit Associations

Governing law: D.C. Code Title 29, Chapter 11

Overview

• Default framework: For clubs, associations, groups that haven’t formally incorporated
• No filing required: Comes into existence when people associate for common nonprofit purpose
• Limited liability: Members generally not personally liable for association debts (statutory protection)

When to Formalize as Nonprofit Corporation Instead

• Need to open bank accounts or hold property
• Want to apply for grants or 501(c)(3) status
• Seek clear liability protection and formal governance
• Plan to hire employees or enter contracts

Foreign Entities in DC

If your LLC or corporation was formed in another state but you’re doing business in DC, you must register as a foreign entity.

Foreign Registration Requirements

• File: Foreign Registration Statement (entity-specific DLCP form)
• Fee: $220 (standard for most foreign entity registrations)
• Certificate of good standing: From home state (must be recent)
• DC registered agent: Required (physical DC address)
• Biennial reports: Same as domestic entities ($300, April 1 cycle)

Foreign Entity Tax & Licensing

• DC franchise tax: Foreign entities with DC nexus subject to same 8.25% franchise tax
• Basic Business License: Required if operating in DC
• Clean Hands: Must maintain <$1,000 outstanding DC tax debt

What Constitutes “Doing Business” in DC?

Generally includes:

• Maintaining a physical office or place of business in DC
• Regularly conducting business meetings or transactions in DC
• Having employees physically located in DC
• Owning or leasing real property in DC

NOT doing business: Isolated transactions, maintaining bank accounts, holding board meetings, owning passive investments, litigation.

⚖️ Entity Type Comparison

Formation Fees & Ongoing Costs

* 5-year total assumes minimum franchise tax ($250/year for 5 years = $1,250) + formation fee + 2 biennial reports ($300 × 2 = $600). Does not include registered agent fees, legal fees, or expedited processing.

Liability, Tax & Governance Comparison

Decision Framework: Which Entity When?

Choose LLC if:

• You want simplicity and minimal ongoing formalities
• You prefer pass-through taxation (avoid double tax)
• You don’t plan to raise venture capital
• You’re a small business, consultant, or professional service provider
• You want flexibility to elect S-corp or C-corp taxation later

Choose Series LLC if:

• You have multiple rental properties or real estate holdings to segregate
• You operate multiple business divisions or product lines
• You want cost efficiency (one entity, multiple liability shields)
• You can maintain rigorous separate accounting for each series
• Your business operates primarily in DC (series shield uncertainty elsewhere)

Choose C-Corporation if:

• You plan to raise institutional venture capital
• You want to issue stock options to employees
• You’re building a scalable, high-growth company
• You plan to go public (IPO) eventually
• You need multiple classes of stock (common, preferred)

Choose Benefit Corporation if:

• Your business has a social or environmental mission alongside profit
• You want legal protection to prioritize mission over short-term profit
• You’re seeking impact investors or B Corp certification
• Transparency and accountability to stakeholders matter to you
• You’re in DC’s mission-driven, policy-adjacent ecosystem

Choose Nonprofit Corporation if:

• Your organization serves a charitable, educational, or religious purpose
• You want donors to receive tax deductions for contributions
• You plan to apply for grants from government or foundations
• You’re comfortable with restrictions on political activity and profit distribution
• You’re establishing an advocacy organization, NGO, or policy group in DC

Choose Partnership (LP/LLP/LLLP) if:

• You’re structuring an investment fund or real estate syndication
• You’re a professional firm needing partner liability protection (LLP)
• You want pass-through taxation with specialized management/investor structures

Choose Cooperative if:

• You want democratic member control (one-member-one-vote)
• You’re forming a worker cooperative, housing co-op, or food co-op
• Equitable ownership and patronage-based distributions align with your values

💰 DC Tax & Licensing Requirements

DC Franchise Taxes

Corporation Franchise Tax (Form D-20)

• Who files: C-corporations and entities taxed as corporations with DC nexus
• Tax rate: 8.25% on DC taxable income
• Minimum tax:
  • $250 if DC gross receipts ≤ $1 million
  • $1,000 if DC gross receipts > $1 million
• Due date: 15th day of 4th month after tax year ends (April 15 for calendar year)

Unincorporated Business Franchise Tax (Form D-30)

• Who files: Unincorporated businesses (partnerships, LLCs, sole proprietors) engaged in trade/business in DC
• Exemption: Personal services businesses (>80% income from owner services, no material capital) are exempt
• Gross income exemption: Exempt if gross income ≤ $12,000
• Tax rate: 8.25% on DC taxable income
• Minimum tax: Same as corporate ($250 or $1,000 based on gross receipts)

Basic Business License (BBL)

Most businesses operating in DC must obtain a Basic Business License before conducting business.

BBL Requirements

• Tax registration: Register with DC Office of Tax and Revenue (OTR)
• Zoning compliance: Business activity must comply with DC zoning for the location
• Clean Hands Certificate: No more than $1,000 in outstanding DC tax obligations (threshold raised from $100 in 2024)
• Entity formation: Entity must be properly formed or registered with DLCP

BBL Process

1. Form entity: File formation documents with DLCP; receive entity confirmation
2. Obtain EIN: Apply for federal Employer Identification Number from IRS
3. Register for DC taxes: Register with OTR for franchise tax, sales tax (if applicable), withholding tax (if employees)
4. Apply for BBL: Submit application online via MyTax.DC.gov
5. Pay BBL fee: Varies by business type (typically $70-$370 for 2-year license)
6. Renewals: BBL must be renewed every 2 years

Other DC Taxes & Registrations

Sales and Use Tax

• Rate: 6% on retail sales of tangible personal property
• Who collects: Retailers selling goods in DC
• Registration: Required if selling taxable goods; register with OTR

Withholding Tax

• Requirement: Employers must withhold DC income tax from employee wages
• Rate: Graduated rates from 4% to 10.75% based on income
• Registration: Register with OTR when hiring first employee

Personal Property Tax

• Who pays: Businesses with tangible personal property (furniture, equipment, inventory) located in DC
• Filing: Annual personal property tax return (Form FP-31)
• Due date: July 31 annually

Tax Comparison: DC vs. Other States

When DC Tax Structure Makes Sense

✅ Form in DC if:

• You have a physical office, employees, or operations in DC
• Your primary customers or revenue sources are in DC
• You’re in the policy, advocacy, or nonprofit ecosystem
• You’re a DC-based professional service provider
• You want proximity to federal agencies and policymakers

❌ Consider another state if:

• You’re a pure holding company with no DC operations
• You have no DC employees, office, or physical presence
• You want to minimize state-level taxes (consider WY, NV, DE)
• You’re seeking VC funding and investors prefer DE incorporation

Tax Planning Strategies for DC Entities

LLC Tax Elections

• Default (partnership): Pass-through taxation, subject to DC unincorporated business franchise tax if not personal services
• S-corp election: Pass-through + potential self-employment tax savings; still subject to DC franchise tax
• C-corp election: Corporate franchise tax; useful if retaining earnings or seeking VC

Nonprofit Tax Strategy

• Apply for federal 501(c)(3) exemption (exempt from DC franchise tax)
• Apply for DC tax exemptions separately with OTR
• Maintain unrelated business income separately (subject to UBIT)

Series LLC Tax Considerations

• IRS treats series LLC as single entity (parent files one tax return for all series)
• Each series may have different allocations and distributions
• Proper accounting essential to support series-level economics

📦 DC Entity Formation Services

I personally handle your DC business formation – attorney-led service, not a paralegal or automated system. Fixed fees, no surprise bills, and deep expertise in DC business law.

À La Carte Services

Why Work With Me?

• Attorney-led service: I personally handle your formation, not a paralegal or automated system
• DC expertise: Deep knowledge of D.C. Code Title 29, DLCP procedures, and DC tax regime
• Series LLC specialist: Experience structuring series LLCs with proper liability segregation
• Benefit corporation guidance: Help mission-driven companies navigate benefit corp requirements and impact reporting
• Nonprofit ecosystem: Understanding of DC’s advocacy, policy, and NGO landscape
• Tax strategy: Navigate DC’s 8.25% franchise tax and BBL/Clean Hands requirements
• Fixed fees: No surprise bills; all packages are flat-fee with clear scope
• Long-term support: I’m here for amendments, compliance, conversions, and growth

Contact & Booking

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