Step 1) Verify & Reserve Your Corporation's Name
Before you can move forward with your Washington, D.C. business venture, you’ll need to choose a name for your company. Your name not only needs to capture your mission, it must also comply with a number of guidelines. For example:
- It cannot be the same as, or too similar to, the name of any existing business in the District of Columbia.
- It must end with the word “corporation,” “incorporated,” or an abbreviation of either.
- It cannot contain prohibited or restricted words. This includes words describing any specific business type you are not operating, such as “bank” or “attorney,” as well as phrases like “Secret Service” that may confuse your corporation with a government agency.
Once you find your perfect business name, you can reserve it for later use or register your corporation using that name.
WHAT TO DO:
Once you have a name in mind, you can conduct at business entity name search to determine if it is available for use. If you find that your name is quite similar, but not identical, to an existing Washington, D.C. business, you may want to consult a professional to determine whether or not you’ll be permitted to use it. Once you’ve established the availability of your name, you can register or reserve it.
This is also the best time to find a domain name for your business. If a good domain is available, it is wise to buy it, even if you’re not planning to launch your website right away. Having a memorable URL that matches your business name will make it easier for customers to find you.
Step 2) Appoint A Registered Agent
The next step required before submitting paperwork to form your Washington, D.C. corporation is to choose a registered agent to represent your business. Your registered agent will be responsible for:
- Maintaining normal business hours at a District of Columbia address
- Receiving legal documents like tax forms and service of process notices on your behalf
- Alerting you of important notices and deadlines
Your D.C. registered agent can be an individual or a company. An individual registered agent must be a resident of the District of Columbia and maintain a local address (not a PO Box). Companies must be legally authorized to represent businesses in the District of Columbia.
You may also choose to act as your own registered agent in Washington, D.C., though this comes with some risks. It may require you to publish your personal address, and you run the risk of being served in front of your customers, your family, or your employees. Plus, it requires you to be available at your home or business address during regular business hours each day.
WHAT TO DO:
If you’re thinking about serving as your corporation’s registered agent, read through our registered agent guide first to get a better idea of what this will entail. If you think you can handle the responsibilities yourself, it’s perfectly fine to do so. Many business owners choose to go this route to save some money. You’ll also have the opportunity to change your registered agent in the future if you find the setup is not working for you.
If you choose to hire a registered agent, there are several reasonably priced providers to consider. One of the best ways to obtain a registered agent is through an incorporation service like IncFile. They provide a full year of registered agent service for free when you incorporate with them.
Step 3) File Articles Of Incorporation
When you’ve chosen your name and selected a registered agent, it’s time to file your articles of incorporation and make your business official.
The articles of incorporation will disclose the following information to the district:
- The name of your business
- The names and addresses of each incorporator
- Your registered agent’s name and street address
- The number of shares your corporation will be allowed to issue
You’ll also have to include a filing fee, which varies depending on your corporation’s authorized capital:
- <$100,000 authorized capital: $220 filing fee
- $100,001-$500,000 authorized capital: $550 filing fee
- $500,001-$1,000,000 authorized capital: $1,100 filing fee
- >$1,000,001 authorized capital: $1,650 filing fee
WHAT TO DO:
If you decide to file your articles of incorporation on your own, make sure you do all the necessary research to fill them out completely and correctly. That said, obtaining the services of a business attorney or online incorporation service can ensure the process runs smoothly.
Step 4) Obtain EIN
Once you’ve registered your corporation in Washington, D.C., it’s time to get an EIN, or Employer Identification Number. An EIN is like a social security number for your business, and all corporations are required to have one.
You’ll need an EIN for pretty much every move you make from now on, so it’s a good idea to get one as soon as possible. Luckily, this step is not too complicated, and it doesn’t have to be a financial burden, either.
WHAT TO DO:
Step 5) Conduct Organizational Meeting
Once you’ve completed all the initial steps to form your corporation, it’s important to conduct your first organizational meeting with your board of directors. During this meeting you should:
- Divvy up shares of stock
- Elect corporate officers
- Write a banking resolution
- Reach a consensus on S-Corp or C-Corp status
This is also when you will record your first meeting minutes and establish corporate bylaws. Corporate bylaws detail the responsibilities each board member has, describe how significant business decisions will be made, and outline the overall leadership structure of a corporation. The bylaws you establish at your initial board meeting will remain in place until they’re modified at your first shareholder meeting.
WHAT TO DO:
Since your first board meeting will need to deal with several big decisions, it’s a good idea to go into it as organized as possible. To get an idea of what your corporate bylaws and meeting minutes should include, it can be helpful to peruse some online templates. Here you can find some of the best templates for corporate bylaws and meeting minutes, to help you plan ahead.
Step 6) Start A Corporate Records Book
This step can be done at any point, before or after your initial board meeting. The purpose of having a corporate records book is to keep all your legal documents in one place. This includes your:
- Articles of organization
- Permits and licenses
- Banking resolution
- Corporate bylaws
- Meeting minutes
WHAT TO DO:
Make sure to keep all your important documents in order. You can create your own records book or purchase a corporate kit to help you stay organized.
Step 7) Tackle Taxes & Licensing
Next on the agenda is handling all the tax and licensing requirements needed to do business in the District of Columbia. Depending on the specifics of your business, you may be required to obtain permits or pay special taxes on the federal and/or district level. Here are some tips for each:
- Federal: The Small Business Association offers a comprehensive guide to business licenses and permits. They provide a list of business types that require special authorization and direct you to the proper department website. For federal business tax requirements, the IRS website is the best resource you have at your disposal.
- District of Columbia: With few exceptions, in order to operate a corporation in the District of Columbia, you must acquire a Basic Business License, sometimes in multiple categories. In addition, Washington, D.C. corporations are required to pay the district’s franchise tax rate, which is 9.2% of taxable income.
WHAT TO DO:
When it comes to business licenses and permits, you once again have the option to hire a professional service or go it alone. If your Washington, D.C. corporation only needs a Basic Business License, investing in professional assistance is generally not necessary.
However, if you find yourself juggling several applications because your business deals with highly monitored products or activities, you may benefit from using a business license service.
Step 8) Open a Business Bank Account
When you’ve completed everything above, the final step should be opening your business bank account. Ideally, you’ll have decided on a bank during your organizational meeting. If not, it’s important to consider all your options:
- Local options, like Access National Bank or John Marshall Bank. Local banks often have excellent customer service and perks for small businesses.
- National options, like Capital One and Chase. Despite their massive scale, many national banks are actually very small-business friendly.
You’d be wise not to rush into this decision. Discuss your options in-depth with your board of directors and come to a consensus on what’s most important for your business: customer service, online access, financial incentives, nationwide ATMs, or any number of other features that can help your business thrive.
WHAT TO DO:
Check out our top 5 business bank accounts to kick off your research. Once you narrow down your list, make some calls and visit a few branches in person to discuss your options. While you’re there, ask a representative about what documentation you’ll need to provide to open an account.
Lastly, be prepared to sync your business bank account with accounting software to start managing your financials right off the bat. We’ve ranked our favorite options for accounting software based on price, quality, and customer reviews to help you choose one that will best suit your needs.
Need Help Incorporating?
Forming a corporation in Washington, D.C. is serious business, and not all entrepreneurs have the time and energy to do it all on their own.
If you’d like some assistance, seeking professional help through an incorporation service can be invaluable. Here are three popular services:
- IncFile ($49 + state fees) = Good rates and convenient features
- LegalZoom ($149 + state fees) = Most popular among business owners