Starting a Corporation in DC | What You Need to Know


Steve Bennett
Steve Bennett
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Start a Corporation in DC

In the District of Columbia, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in DC, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in DC.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in DC?

A corporation in DC is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in DC are required to have at least Three directors. One of the main advantages of a corporation in DC is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in DC is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in DC if you would like to provide limited liability protection to your shareholders rather than DC LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in DC

To start a corporation in DC, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with DC naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in DC-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the DC Secretary of State‘s business name database and Business Name Search in DC. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $50 and mail name reservation fee of Not available. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, online and by mail, which costs around $55. In addition, the DBA’s validity in DC is two year, which you can file in DC Secretary of State.

You can check out How to File a DBA in DC for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are DC Registered Agent Services to check in forming DC Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in DC are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In DC, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your DC corporation, the next step is to write and file a Articles of Incorporation. In writing, the DC Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your DC corporation, you must prepare and file Articles of Incorporation with the DC Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the DC Secretary of State’s office, along with the required filing fee. Fees vary by state, but in DC, the Articles of Incorporation filing fee costs around $220 for filing online and by mail filing. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the e-form, fill it, and submit online. Or get the online PDF, fill it up and upload it back on the site.
  • Offline filing: Send the form by mail to Department of Consumer and Regulatory Affairs, Corporations Division, P.O. Box 92300, Washington, D.C. 20090

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in DC, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing DC corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your DC corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in DC are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • DC Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required DC licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your DC corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in DC for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your DC corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in DC can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Office of Tax and Revenue for guidance on your specific obligations.

Step 11: Biennial Reporting and Ongoing Compliance

Once your DC corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Biennial Report with the DC Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in DC

Even if you have established your corporation in DC, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in DC has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in DC are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in DC

In forming a corporation in DC, a filing and Biennial fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in DC, it costs $220 for filing online and by mail filing. The corporation in DC also has to file an Biennial Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

How do I start a corporation in DC?
You can start a corporation in DC by filing the necessary paperwork with the DC Department of Consumer and Regulatory Affairs (DCRA).
What documents do I need to file to start a corporation in DC?
You need to file Articles of Incorporation with the DCRA to start a corporation in DC.
Can I file Articles of Incorporation online?
Yes, you can file Articles of Incorporation online through the DCRA website.
What are the fees to file Articles of Incorporation in DC?
The fee to file Articles of Incorporation in DC is $220, plus an additional $50 for expedited processing.
How long does it take to get approval for a corporation in DC?
It typically takes 10-15 business days to get approval for a corporation in DC.
Can I reserve a corporation name before filing Articles of Incorporation?
Yes, you can reserve a corporation name for up to 120 days by filing a Name Reservation Application with the DCRA.
Are there any restrictions on corporation names in DC?
Yes, your corporation name must be unique and not already in use by another business in DC.
Do I need to have a physical office in DC to start a corporation there?
No, you do not need to have a physical office in DC to start a corporation there, but you do need to have a registered agent with a physical address in DC.
What is a registered agent?
A registered agent is a person or company designated to receive legal papers on behalf of a corporation.
Do I need to have a board of directors to start a corporation in DC?
Yes, you need to have a board of directors to start a corporation in DC.
How many directors do I need to have for a corporation in DC?
You need to have at least one director to start a corporation in DC.
Do directors need to be residents of DC?
No, directors do not need to be residents of DC.
Do I need to have shareholders to start a corporation in DC?
Yes, you need to have shareholders to start a corporation in DC.
How many shareholders do I need to have for a corporation in DC?
There is no minimum number of shareholders required for a corporation in DC.
Can I be the sole shareholder, director, and officer of a corporation in DC?
Yes, you can be the sole shareholder, director, and officer of a corporation in DC.
What is the purpose of a corporate bylaws?
Corporate bylaws outline the rules and procedures for how the corporation will be run.
Do I need to file bylaws with the DCRA?
No, you do not need to file bylaws with the DCRA, but they should be kept on file with your corporation’s records.
What is the corporate tax rate in DC?
The corporate tax rate in DC is 8.25%.
Do corporations in DC have to pay excise tax?
Yes, corporations in DC have to pay excise tax, which is assessed on certain business activities.
Is DC a community property state for corporations?
No, DC is not a community property state for corporations.
Do DC corporations need a business license?
Yes, DC corporations need a general business license from the DC Business Center.
Can I operate my corporation in other states?
Yes, you can operate your corporation in other states, but you may need to register as a foreign corporation in those states.
Does DC require corporations to file an annual report?
Yes, DC corporations are required to file an annual report with the DCRA.
Are DC corporations required to hold annual meetings?
Yes, DC corporations are required to hold annual meetings of shareholders and directors.
What is DC’s minimum wage?
DC’s minimum wage is $15.00 per hour.
Are employers in DC required to provide paid sick leave?
Yes, employers in DC are required to provide paid sick leave to employees.
Do DC corporations need to have liability insurance?
There is no legal requirement for DC corporations to have liability insurance, but it is recommended.
How do I start a corporation in Washington DC?
To start a corporation in Washington DC, you must file Articles of Incorporation and obtain a Corporate Certificate from the Department of Consumer and Regulatory Affairs.
What is the filing fee in DC for starting a corporation?
The filing fee for Articles of Incorporation with the DCRA’s Corporations Division is $220.
How long does it take to start a corporation in DC?
It usually takes about three to five business days to process Articles of Incorporation in DC.
Can I file Articles of Incorporation online in DC?
Yes, you can file Articles of Incorporation online through the DCRA’s CorpOnline service.
Can I reserve a corporation name in DC?
Yes, you can reserve a corporate name for 120 days by submitting a Reservation of Name form to the Department of Consumer and Regulatory Affairs.
When do I need to file my corporation’s Annual Report in DC?
Corporations in DC must file their Annual Report by April 1st every year.
How do I dissolve a corporation in DC?
To dissolve a corporation in DC, you need to file Articles of Dissolution with the Corporations Division and pay a $95 fee.
Can foreign corporations do business in DC?
Yes, foreign corporations can do business in DC, but they must register with the Corporations Division and appoint a registered agent in the District.
What are the requirements to be a registered agent in DC?
The registered agent in DC must be a resident of the District or a company authorized to do business in the District.
How many directors do I need on my corporation’s board in DC?
You need to have at least one director on your corporation’s board in DC.
What is the minimum number of shareholders required for a corporation in DC?
You need at least one shareholder to start a corporation in DC.
Can a corporation in DC have only one shareholder and one director?
Yes, a DC corporation can have only one director and one shareholder, as long as they are not the same person.
Can a non-US citizen start a corporation in DC?
Yes, non-US citizens can start a corporation in DC.
How do I get an employer identification number (EIN) for my corporation in DC?
You can get an EIN for your corporation in DC by applying online or by mail with the IRS.
Do I need a business license to operate a corporation in DC?
Yes, all corporations in DC are required to obtain a Basic Business License and any other necessary permits and licenses.
Can I convert an LLC to a corporation in DC?
Yes, you can convert an LLC to a corporation in DC by filing Articles of Domestication with the Department of Consumer and Regulatory Affairs.
What is the personal liability of shareholders in a DC corporation?
Shareholders in a DC corporation are not personally liable for the company’s debts or liabilities, except to the extent of their investment.
Is a corporation taxed differently in DC than other entities?
No, corporations in DC are subject to the same tax laws as other business entities.
Are there any tax incentives for start-up corporations in DC?
Yes, DC offers several tax incentives and exemptions for qualifying start-up corporations.
What is a Washington DC Certificate of Good Standing?
A Washington DC Certificate of Good Standing is a document that verifies that a corporation is up-to-date on its taxes and regulatory filings with the District.
Can I request expedited processing for my corporation’s Articles of Incorporation in DC?
Yes, you can request expedited processing for an additional fee of $100.
Can I name my corporation anything I want in DC?
No, your DC corporation name must be distinguishable from other registered entity names in the District.
Can I change my corporation’s name in DC?
Yes, you can change your corporation’s name by filing Articles of Amendment with the Corporate Division and paying a $55 fee.
Do I need to appoint officers in my DC corporation?
No, you are not required to appoint officers in your DC corporation, but most corporations have officers such as a President, Vice President, and Secretary.
Is there a residency requirement for directors in DC?
No, there is no residency requirement for directors in DC.
What is the difference between a C-Corp and an S-Corp in DC?
The main difference between a C-Corp and an S-Corp in DC is how they are taxed. C-Corps are taxed as a separate entity, while S-Corps are not subject to federal income tax at the corporate level and instead pass-through income to shareholders.
Can I merge my corporation with another entity in DC?
Yes, DC allows corporations to merge with other entities by filing Articles of Merger with the Department of Consumer and Regulatory Affairs.
How often do I need to renew my corporation’s business license in DC?
DC business licenses need to be renewed every two years.
Can I operate a business under a different name than my corporation in DC?
Yes, you can operate a business under a trade name by filing a Trade Name Registration with the DCRA and paying a $55 fee.

Also Read

How to Save Money While Forming Your District of Columbia Corporation

One of the first steps to saving money on forming your District of Columbia corporation is to carefully research and understand the requirements and fees associated with the process. Before diving in, it is important to have a clear understanding of the necessary steps, paperwork, and costs involved. By doing your homework and being fully prepared, you can avoid unnecessary fees and expedite the process.

Another way to save money is to explore DIY options for certain aspects of forming your corporation. While some steps, such as filing with government agencies, may require professional help, others can be done on your own with a little time and effort. For example, you may be able to draft and file your own articles of incorporation or create your bylaws without the assistance of a lawyer. By taking on some of these tasks yourself, you can significantly reduce your expenses.

Additionally, it is important to consider alternative business structures that may be more cost-effective for your specific needs. While forming a corporation is often the go-to choice for many entrepreneurs, other structures such as LLCs or sole proprietorships may be better suited for smaller businesses or those with less complex operations. By carefully evaluating your options, you can choose the structure that not only meets your legal and operational needs but also fits within your budget.

When it comes to legal services, it is important to shop around and compare prices before committing to a law firm or attorney. Different firms may offer different pricing structures or packages, so it is worth taking the time to find one that is transparent about their fees and offers competitive rates. Additionally, consider working with a lawyer who specializes in corporate law and has experience in establishing businesses in the District of Columbia. This expertise can not only save you time and money in the long run but also help ensure that your corporation is set up correctly from the beginning.

Finally, do not overlook the resources and assistance available through government agencies and small business organizations. Many resources exist to help entrepreneurs navigate the process of forming a corporation and provide valuable guidance and support at little to no cost. From online guides and webinars to in-person workshops and counseling services, these resources can help you save money on legal fees and ensure that you are making informed decisions every step of the way.

In conclusion, forming a corporation in the District of Columbia does not have to break the bank. By carefully researching your options, taking on certain tasks yourself, exploring alternative business structures, comparing prices for legal services, and leveraging available resources, you can save money while still setting up your corporation for success. With a strategic approach and a little creativity, you can keep costs down without compromising on the quality or compliance of your business entity.

Conclusion

Starting a corporation in DC involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your DC corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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