Setting Up an LLC in the District of Columbia
You are starting up a new business in D.C., and you have already determined that the best way to set it up is as a Limited Liability Company (“LLC”). Now what?
Creating an LLC in the District of Columbia can be a complicated process involving multiple governmental entities, including the Department of Consumer and Regulatory Affairs (“DCRA”), the Office of Tax and Revenue (“OTR”), the Internal Revenue Service (“IRS”), and, in some cases, the Department of Housing and Community Development (“DHCD”). This can make for a bureaucratic nightmare which can delay the formation of your business. The following is a list of the steps a prudent business owner should take in order to comply with District of Columbia law:
Articles of Organization. This document is the one that officially registers your business as an LLC in the eyes of the District of Columbia. Ideally, you will have had an attorney draft Articles of Organization for you, so that they can be included with your application to DCRA.
Operating Agreement. This is an internal document (not filed with any governmental entity) that describes the purpose(s) of your business and governs how the business will be run. Having an executed operating agreement can be very important, especially to serve as evidence that your business is a legitimate LLC in the face of accusations that it serves as a front for nefarious business dealings.
Registered Agent. Every LLC must name a registered agent and address. The registered agent is the person who is served when your LLC is sued and who receives official government notifications. For convenience, many business owners choose to name their attorney as their registered agent. There are also a number of companies that will allow you to name them as your registered agent for a fee. Johnson Law Group does not charge a fee to serve as our clients’ registered agent.
Employer Identification Number (“EIN”). An EIN is like a Social Security Number, but for your business. LLCs are entities separate and apart from their owners. Among other things, this means that every LLC must apply for and acquire an EIN from the IRS for federal tax purposes.
Register with OTR. In addition to registering with the IRS for federal tax purposes, you will need to register with the District of Columbia Office of Tax and Revenue for D.C. tax purposes. This entails a lengthy form that describes the nature of your business and requires that you have already registered the business with DCRA.
Business License. Most businesses require some sort of business license, usually a Basic Business License. Others, however, require specific licenses, such as businesses related to healthcare or vendors of certain products. You should speak with your lawyer to determine what type of business license is right for you.
Resolution of Officers. If your LLC has more than one member, you will need a resolution, signed by the LLC’s members, that designates each member’s role in the business (i.e. “President,” “Vice President,” “Treasurer,” and “Secretary.”)
Banking Resolution. Once your LLC is authorized to do business in the District, you will want to open a bank account in the name of the business. In order to do this, you will need a resolution, signed by the LLC’s members, authorizing you to open the bank account. Most financial institutions require that you bring the resolution and EIN with you to the bank in order to open the account.
Rental Accommodations Division. Finally, if your business is one that rents out property for residential use, you will need to register your business with the DHCD Rental Accommodations Division. For more information about becoming a housing provider in D.C., see our article on the subject.
Over the years, Johnson Law Group has assisted hundreds of business owners to navigate D.C.’s complex compliance process. If you would like help setting up your business, contact our office to speak with an experienced attorney. After we set up your business, we will keep your business’ operational and governance documents in our secure online database so that you can access them easily anytime.