How to Start a Washington D.C. Small Business

Do you have a great business idea, but you’re not quite sure how to get from the idea phase into owning and operating your own business in Washington DC? You’ve come to the right place! There are many important aspects to running a company, and like any other state, Washington DC has its own rules and regulations to consider.

In this guide to starting a business in Washington DC, we’ll discuss all the relevant details to business ownership in this state. By the time you’re done reading, we think you’ll have a strong grasp on the necessary steps involved.

How to Start a Business in Washington DC (in 10 Steps)

1) Create a Business Plan

The first step to creating any business in any state is to plan what products and services you’ll sell, set your operational budget, and figure out how you want to market your company.

Your business plan doesn’t have to be fancy at all, you just need to make sure you spend enough time considering these important aspects before you actually launch your business. To get started, SBA.gov has a great free tool.

2) Choose a Name

The name of your business is an extremely important attribute because it’s often how you make your first impression to potential customers.

Legal Considerations

Depending on whether you choose to form a corporation or a limited liability company, there are some legal aspects as well (for example, an LLC must include “LLC” or “limited liability company” in the business name, and a corporation must include “incorporated,” “corporation,” “Inc.,” or “Corp.”).

Explanatory Naming

Beyond the basic legalities, you should focus on clearly identifying what your company does in your business name. You can also consider incorporating your values into your business name, like using the word “green” to denote environmental friendliness.

Something You Love

Finally, choose a name that you personally like and take pride in, and one that both sounds good when spoken aloud and looks good on paper.

One big piece of advice we have for naming a business is that you shouldn’t get too focused on one idea until you either form your company or reserve the name.

In Washington D.C., you can run a business name search through the DC Business Center to determine if your desired name is available. It may be necessary to delay formal registration of your business, in which case you can reserve your business name for a period of 60 days. To do so, you must fill out the name reservation form and file it with the Department of Consumer & Regulatory Affairs.

3) Decide on a Registered Agent

A Washington DC registered agent is the person or service in charge of receiving your important government documents, and forwarding them to you.

According to the Washington D.C. Department of Consumer & Regulatory Affairs, all domestic and foreign business entities must have a registered agent. This can either be a commercial or noncommercial registered agent. You can use this form to appoint a registered agent for your business.

This position is vital to any Washington DC business because without a registered agent, you could lose your good standing with the state, see your business dissolved by the state, or even remain unaware of a lawsuit progressing against your company.

Though the District of Columbia does not provide a list of commercial registered agents, there are numerous companies that can provide this service throughout the District.

4) Choose a Structure and Form Your Business

If you’re just operating a sole proprietorship or general partnership, you don’t need this step (or several of the others in this guide, including selecting a registered agent), because those business structures don’t require any sort of formal formation process.

This leaves two main options: the corporation and the limited liability company.

The LLC is the more common option, partially because it’s much simpler. There’s not much paperwork involved, and the maintenance requirements basically amount to an annual report. Furthermore, LLC owners still receive the personal asset protection that makes a corporation so attractive as a business type in the first place. For more specific information about starting an LLC, check out our full article on the topic.

For some entrepreneurs, the corporation is the better choice. There’s far more effort involved both in forming one and in maintaining it with the state of Washington DC, but for larger businesses they’re usually the better option, as they allow for more growth and investment than LLCs generally do.

If you would like to know more, check out our “LLC vs Corporation: What Is the Difference?” article. No matter which business structure you choose to form, you can find all the relevant forms on the Iowa Secretary of State’s website or have a professional business formation website do it for you.

5) Take Care of Tax Obligations

The vast majority of businesses operating in Washington DC will need a federal tax ID number (EIN), which can be acquired from the IRS.

In Washington D.C., most LLCs are subject to the unincorporated franchise tax. Additionally, there are a variety of other tax registration requirements that may or may not apply to your company, depending on the nature of your business.

Thankfully, the Office of Tax and Revenue provides information and services through the Business Tax Service Center. From this website, you can access the MyTax.DC portal. According to the Business Tax Service Center, MyTax.DC makes it “convenient to access account information, schedule payments, view transaction history, file returns electronically, and more.”

Keep in mind that your city and/or county may have taxation requirements as well, so make sure to check with them to make sure you aren’t missing anything.

6) Acquire Business Licenses and Permits

Most businesses in the District of Columbia will need to obtain a Basic Business License (BBL). According to the DC Business Center, “a Basic Business License (BBL) is a document issued from the DCRA’s Business Licensing Division and is required for such business activities as the operation of restaurants, convenience/retail stores, consulting firms, home improvement businesses, and many more.” You can learn more about obtaining a BBL here.

In addition, there are hundreds of industry-specific licenses and permits that may apply to your company depending on the nature of your business. To find more information business licenses and permits, you should reference the District’s Business Licensing webpage.

Much like with taxation issues, there’s also the matter of local licenses to consider. You can learn more about county-level occupational licenses right here.

7) Obtain Required Insurance Policies

In order to operate a business with employees in Washington D.C., you are legally required to obtain workers’ compensation insurance and unemployment insurance. The former can be acquired from a certified insurance carrier, while the latter is administered through the federal government via unemployment taxes.

You can learn more about these insurance types and how they apply to Washington D.C. businesses by visiting the Department of Employment Services website.

It is the employer’s responsibility to get these policies to protect your employees, regardless of what line of business you’re in. Of course, it’s probably a good idea to acquire industry-specific policies to protect your company in other ways, but unemployment and workers’ comp are the ones strictly required by law.

8) Open a Business Bank Account

Whether you start a limited liability company or a corporation, you’ll need to keep your business and personal assets separated.

This is where opening a business bank account comes in. While having a separate checking account for your company isn’t a legal requirement, it makes separating your assets considerably easier, and we always advise that any business owner does so.

9) Develop a Business Website

In this day and age, even strictly local businesses should have a website, because the internet is your first point of contact for many of your customers. Your site doesn’t need to be fancy, but you should put some thought into your domain name, and make sure it’s something memorable and easy to type without misspellings.

If you’re not comfortable designing a site yourself ― and if you also don’t have the budget to hire a professional designer ― there are plenty of website builder tools that can help you put together a solid website. WordPress and Weebly are very easy to use.

10) Don’t Be Afraid to Ask for Help

If you run into problems with any of the steps outlined in this guide, remember that you can always find help.

In Washington D.C., the D.C. Small Business Development Center exists solely to (in their own words) “assist entrepreneurs, novice and experienced alike, along every stage of the business life cycle.” Centrally located in Washington D.C., the SBDC is ready and willing to help if you need assistance.

Conclusion

While there are several vital steps in the process of starting a business in Washington DC, taken individually these steps aren’t terribly complex.

It can seem overwhelming if you consider the entire process all at once, but if you break down these steps and take care of them one at a time, they’re all quite manageable. Keep in mind that you don’t need to go it alone with the DIY option ― if this process becomes overwhelming, or if you simply don’t have the time and energy to devote to these steps ― assistance is available.