By Christine Chu
Washington D.C. is not just a center for political action, but also a thriving community of entrepreneurs and center for business innovation. In fact, there are several advantages to incorporating in Washington D.C., from tax credit and exemption programs to business incentives like the Qualified High Tech Companies Program.
If you’re interested in incorporating in Washington D.C., follow this step-by-step guide for individual steps on filing formation documents, getting tax identification numbers, and setting up your company records.
1) Check Name Availability
Conduct a name search to check that the legal name of your corporation doesn’t conflict with any other registered name.
2) Appoint a Registered Agent
Appoint a Washington D.C. registered agent, who will receive notice of lawsuit and other legal service for your business.
3) File Washington D.C. Articles of Incorporation
Filing the articles of incorporation is the first substantial step towards incorporating in Washington D.C. The minimum filing fee is $220, but it could be more if you have authorized capital up to $100,000. Online, mail, and in-person filing options all exist, which differ in turnaround times.
To file online, you’ll need to use the DCRA’s CorpOnline portal and create an account. The turnaround time is 10 business days online. To expedite the turnaround to just 3 business days, there’s an additional $50 fee, and for 1 business day, pay a $100 fee.
To file by mail or in-person, download and fill out a paper copy of the Washington D.C. Articles of Incorporation form. Expedited mail filings are not usually available at a turnaround of 3-4 weeks. In-person filings require a $100 expedited fee and are processed day-of.
4) Establish Bylaws & Corporate Records
It is important for your corporation to keep complete books and records of official proceedings. Your articles of incorporation will be the first documents in your corporate records, but it will grow to include official records of bylaws, meeting minutes, and your EIN.
You should keep permanent records of minutes of all meetings with shareholders and board of directors and actions taken with or without a meeting, in accordance with D.C. Code.
Draft bylaws that will govern your corporation proceedings, to be ratified at your first board of directors meeting. These will detail how your business will be run and regulated, in accordance with D.C. laws and the articles of incorporation.
5) Appoint Initial Directors
Before directors are elected, initial directors should be appointed to the board until an annual meeting of shareholders. Initial directors can be appointed by the incorporator if not named in the articles of incorporation.
6) Hold Organizational Meeting
As stated in D.C. law, an organization meeting of the incorporators or initial directors must be held. It is important to keep minutes of the meeting.
7) Issue Stock Certificates
You may want to issue stock certificates to owners, which will serve as proof of ownership in your corporation. Hold and keep minutes of a first annual meeting of shareholders in accordance with state laws.
8) Get Federal Employer Identification Number (EIN)
Regardless of whether you’re hiring employees, you must obtain an EIN, submitted to the IRS. You will want to submit the form by mail, phone, fax, or apply for the EIN online. There are no fees for this application and online turnaround is immediate. Do note, however, that the IRS website is only available during certain hours; you will want to print your EIN before closing your application session.
9) Get WA D.C. State Tax Identification Numbers / Accounts
State tax registration is consolidated in Washington D.C. through the FR-500 form, which can be filed at no cost by mail or online.
10) Consider Electing S-Corp Taxation
Your corporation is, by default, taxed as a C-Corp. However, C-Corps suffer from double taxation, as the corporation is taxed on profits and then members pay taxes on their distributions. S-Corp tax treatment avoids this and is generally the best choice for small business.
11) Obtain Business Licenses & Permits
There are additional licenses and permits you must obtain, as applicable to your business. There are a range of federal, state, and local requirements, which you can search up with the Small Business Administration Business License & Permit look-up tool. This will determine additional required licenses based on business type and locality.
12) Ongoing Filing to Maintain Your Corporation
File your annual federal and state tax returns. After filing within the first year of registration, Washington D.C. corporations must file biennial (2-Year) reports every two years afterwards to keep active and in good standing.
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