To register business in D.C., you must first decide what type of business you are registering. Different business entities have different registration processes, so you must make sure you're following the correct steps for your entity type.

Registering a Sole Proprietorship

If you are the only owner of your business, it means you are a sole proprietorship. Running a sole proprietorship is very simple, but also exposes you to unlimited liability.

Registering your sole proprietorship with the District of Columbia Department of Consumer and Regulatory affairs is not necessary. You should, however, acquire an Employer Identification Number (EIN) if you plan to hire employees. You may also need to complete a doing business as (DBA) registration if you operate your company using a trade name.

Single-Member LLC Registration

Single-member limited liability companies (LLC) have only one member and provide this member with liability protections. This means that the sole member of the LLC cannot be personally sued for the liabilities of the business. Forming a single-member LLC can be very beneficial for small business owners.

Single-member LLCs are taxed as disregarded entities by default. This means that you include the tax return for your LLC with your personal return. Remember, however, that you do not have to stick with this default tax status. LLCs can choose taxation as either a C or S corporation.

Corporations in D.C.

Forming a corporation with only one shareholder is also possible. If you are thinking about forming a corporation, remember that you will need to follow more formalities than with an LLC. In Washington D.C., for instance, corporations must record the minutes of shareholder meetings and also must adopt company bylaws. Corporations offer the same liability protections as LLCs.

When you incorporate a business, you can choose either C or S corp taxation. Both have their pros and cons, so you should weigh this decision carefully. You must be a United States citizen or resident alien if you are the sole shareholder of your company and want to choose S corp taxation.

Forming a General Partnership

A general partnership is a business that is owned and operated by two or more people. General partnerships are similar to sole proprietorships in that they do not need to be registered in D.C. Some general partnerships will need to obtain an EIN and file a DBA registration.

Multiple-Member LLCs and Corporations With Multiple Shareholders

Forming a multiple-member LLC is usually the best choice for small businesses with multiple owners. With this type of LLC, all owners will receive liability protections, and operations will also be very flexible.

If you're forming a business with partners, you may want to establish a corporation with multiple shareholders. The benefit of this option is that ownership can be very easily transferred, so if a partner decides to leave the company, you would only need to transfer their shares.

Before forming a corporation with multiple shareholders, remember that you can only elect S corp status with less than 100 shareholders who are all U.S. citizens or resident aliens. If one of your shareholders is not a citizen or resident alien, you would not be able to choose this tax status.

Out-of-State Business and Existing Companies

If you have already registered a business in another state and want to do business in D.C., you need to qualify as a foreign entity. Generally, foreign qualification is only necessary if you are planning to:

  1. Establish a physical office.
  2. Lease property in.
  3. Hire employees.

Even if you do not create a strong nexus in D.C., you may still need an eTaxpayer Service Center Number. You can acquire this number from the Office of Tax and Revenue. Your business will need this number if you are using local shippers for products and services that are taxable.

Once you have registered your business in D.C., you'll have access to a wide variety of services provide by the Office of Tax Revenue and Department of Consumer and Regulatory Affairs. These agencies can help you with tasks such as amending your registration, reinstating your company after a suspension, and dissolving your business. Other services include:

  1. Apostilles.
  2. Issuing certified copies of your company's documents.
  3. Issuing a Certificate of Good Standing.

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