Washington DC's LLC filing fee looks cheap, but the District taxes LLCs directly at the entity level in a way most states don't, on top of personal income tax on whatever passes through to you. It's worth budgeting for both from the start. Here's what it takes to start a business in Washington DC in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses in DC. It separates your personal assets from the business's debts and lawsuits, though the entity-level franchise tax below applies regardless.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders. Corporations pay the same 8.25% franchise tax rate as LLCs in DC.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the DC Department of Licensing and Consumer Protection (DLCP), the agency that handles business filings District-wide. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in DC by filing Articles of Organization with DLCP. The filing fee is $99, and online processing takes about five business days.
Every LLC needs a registered agent with a physical DC address, available during business hours. You can act as your own agent, or hire a commercial service.
DC doesn't require an operating agreement by law, but it's still worth writing one, particularly for multi-member LLCs, to spell out how decisions and profits get split.
Sole proprietorships and DBAs
Sole proprietorships don't file Articles of Organization. If you're operating under a trade name, you'll register it with DLCP separately.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Unlike most states, DC requires nearly every business to obtain a Basic Business License (BBL) as a baseline requirement, on top of LLC formation. Beyond that, what you need depends on your industry: professional licensing for regulated fields, and sales tax registration with the Office of Tax and Revenue if you sell 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 is progressive 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, DC imposes the Unincorporated Business Franchise Tax directly on LLCs (and the equivalent Corporate Franchise Tax on corporations) at 8.25% of DC-source net income once gross receipts exceed $12,000, with a $250 minimum for receipts up to $1 million and a $1,000 minimum above that. A narrow exemption exists for LLCs where personal services, not capital, drive the income, but it's fact-specific enough to check with a tax professional.
Sales tax generally runs 6% to 7% depending on the category of goods or services.
6. Stay compliant
DC LLCs file a Biennial Report, not annual, with DLCP, due April 1 in the year after formation and every two years after that. The fee is $300, one of the higher recurring Secretary of State-equivalent fees in the country. A $100 late penalty applies the day after April 1, and DLCP can administratively dissolve the LLC if it 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.