Starting a Business in Washington DC
Step 1: Select a Business Structure
This decision will have an impact on taxes, liability, and defines the relationship between the owners. Here are the most common forms of business structures:
- Sole Proprietorship is the most common form of business organization. It's easy to form and offers complete managerial control to the owner. However, the owner is also personally liable for all financial obligations of the business
- General Partnership A business owned by two or more persons who have agreed—verbally or in a formal written statement—to operate a business.
- Limited Liability Company (LLC) , is very popular because it allows owners to take advantage of the benefits of both the corporation and partnership forms of business. The advantages of this business format are that profits and losses can be passed through to owners without taxation of the business itself while owners are shielded from personal liability
- C (General) Corporation A business formed by law as a separate legal entity from its owners (stockholders and shareholders).
- S Corporation A business similar to a General Corporation, with the exception of specific IRS requirements.
Read more about the advantages and disadvantages of each business structure by selecting here.
Are you specifically interested in forming an LLC? Read through DC Bar Pro Bono’s Guide to Starting an LLC in Washington DC by selecting here.
Step 2: Register Your Business
All businesses operating in the District must be registered with the DC Department of Consumer and Regulatory Affairs (DCRA). This department also issues permits and recognizes business ownership types. The Business and Professional Licensing Administration of the department is for obtaining business licenses and the Permit Center is for occupation and construction permits in the District of Columbia.
Small business services offered through DCRA are available for those seeking further assistance. Select here to register for a free one-on-one session with either a business licensing or permitting professional.
For more information about obtaining a business license, start here.
Step 3: DC Business Tax Identification Number
Business must file for their tax number through the Office of Tax and Revenue (OTR). The DC Combined Business Tax Registration document, or the FR-500, is used to provide information on ownership, location, and type of business. Once you complete the document and submit it to OTR you will be provided with a notice of business tax registration indicating your tax obligations and filing frequency. This will also be the basis for your unemployment tax registration with the Department of Employment services.
Business seeking assistance with this process may register for a one-on-one session with an OTR representative (when available). Visit the Small Business Resource Center to browse available appointments by selecting here.
Select here for more information on the FR-500 form.
Grow Your Business
The District of Columbia Small Business Resource Center (SBRC) provides information and services to entrepreneurs and companies looking to launch and strengthen and grow their business in the District.
SBRC is your one stop shop, bringing together resources from key District agencies including DSLBD, the Department of Consumer and Regulatory Affairs (DCRA), and other non-profit and Federal organizations that serve District businesses.
Through the SBRC, entrepreneurs may register for upcoming training workshops and events. Training opportunities are offered in the following subject areas:
- CBE certification
- Marketing tactics
- Small Business Finance
- Legal Advice
- Taxes and Accounting
- Proposal Development
- Networking Opportunities
The SBRC also offers free and confidential one-on-one services in the following areas:
- Business Plan development
- Business Management
- Small business finance and credit