The $99 filing fee makes forming an LLC in DC look inexpensive, but that's only part of the picture. The District taxes LLCs directly at the entity level, something most states don't do, in addition to personal income tax on whatever profit passes through to you. Budget for both from day one. This is the 2026 process.
1. Which business structure fits you?
Settling on a structure early matters here more than usual, since DC's entity-level tax touches nearly all of them.
- Sole proprietorship. No filing needed to start, since you and the business are legally one entity, though every debt the business runs up is also yours personally.
- Partnership. The same liability exposure as a sole proprietorship, just shared between two or more owners.
- LLC. The most common structure for small businesses here, separating your personal assets from the business's debts and lawsuits, though the entity-level franchise tax described below still applies regardless of which structure you pick.
- Corporation, S-corp or C-corp. More paperwork and more formal upkeep, generally worthwhile once you're bringing on investors or multiple shareholders. Corporations pay the same 8.25% franchise tax rate LLCs do in DC.
See our guide on choosing a business structure for more on how these compare.
The DC Department of Licensing and Consumer Protection (DLCP) is where LLCs and corporations file, District-wide. Sole proprietorships and general partnerships have no reason to register there.
2. Register your business
Forming an LLC
Filing Articles of Organization with DLCP is what forms your LLC in DC, and it costs $99. Online filings generally process in about five business days.
Every LLC needs a registered agent at a physical DC address, reachable during business hours, whether that's you or a paid service.
DC doesn't require an operating agreement by law, but it's still worth drafting one, particularly with more than one member, so decisions and profit splits are settled in writing rather than assumed.
Sole proprietorships and DBAs
Sole proprietorships don't file Articles of Organization. Operating under a trade name means registering it with DLCP separately.
3. Get an EIN
An Employer Identification Number comes free from the IRS and usually takes about 15 minutes to get online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even as a single-member LLC with no employees.
4. Check licenses and permits
DC is unusual in requiring nearly every business to carry a Basic Business License (BBL), a baseline requirement layered on top of LLC formation itself. Beyond that, what else applies depends on your industry: professional licensing for regulated fields, and sales tax registration with the Office of Tax and Revenue if you're selling taxable goods or services. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand DC taxes
DC's personal income tax runs progressively across seven brackets, topping out at 10.75%, the third-highest top rate in the country behind only California and Hawaii. On top of that, the Unincorporated Business Franchise Tax hits LLCs directly (with an equivalent Corporate Franchise Tax for corporations), at 8.25% of DC-source net income once gross receipts pass $12,000, with a $250 minimum up to $1 million in receipts and $1,000 above that. There's a narrow exemption for LLCs where the income comes mainly from personal services rather than capital, but it's fact-specific enough that checking with a tax professional makes sense.
Sales tax generally runs 6% to 7%, depending on the category of goods or services.
6. Stay compliant
Rather than annual, DC LLCs file a Biennial Report with DLCP, due April 1 in the year following formation and every two years after. It costs $300, on the higher end for this kind of recurring state-level fee. Miss the deadline and a $100 late penalty applies starting April 2, with DLCP able to administratively dissolve the LLC if it still isn't filed by September 1.
Washington DC business costs at a glance
| Item | Cost |
|---|---|
| Articles of Organization (LLC) | $99 |
| Biennial Report (every 2 years, due April 1) | $300 |
| Unincorporated Business Franchise Tax (if gross receipts over $12,000) | 8.25%, $250 minimum |
| Basic Business License | Varies by category |
| Registered agent service (optional) | $100 to $300/year |
| EIN | Free (IRS) |
| State income tax | Up to 10.75% (progressive) |
| Sales tax | 6% to 7% depending on category |
Frequently asked questions
Does DC tax LLCs directly at the entity level?
Yes, the Unincorporated Business Franchise Tax applies at 8.25% of DC-source net income once gross receipts exceed $12,000, with a $250 minimum.
How much does it cost to form an LLC in DC?
$99 for Articles of Organization, with online processing taking about five business days.
How often do DC LLCs file compliance reports?
Every two years, called the Biennial Report, due April 1 in the year after formation, for $300.
What's the top personal income tax rate in DC?
10.75%, the third highest top rate in the country behind only California and Hawaii.
Does DC require a Basic Business License?
Yes, unlike most states, nearly every DC business needs one on top of standard LLC formation.
Fees and rates above come from DC DLCP and the Office of Tax and Revenue as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a DC-licensed attorney or CPA about your specific situation.