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Your new LLC’s name must be readily distinguishable from any other business entity’s name registered or reserved with the District, and it must contain the words “Limited Liability Company” or the abbreviation “L.L.C.” You can reserve an available LLC name for up to 60 days for a $35 fee.
The formation of a District of Columbia LLC means that you have to file articles of organization (along with a $150 filing fee) with the DC Corporations Division. The articles, which must be signed and dated by all organizers, must include:
Your new LLC is officially deemed “organized” after the LLC’s articles of organization and an exact copy are delivered to the Corporations Division with the filing fee.
Every District LLC must maintain both a registered agent and registered office in the district—the person or office designated to receive official legal and administrative correspondence on the LLC’s behalf. An LLC registered agent may be an individual who resides in the district, or a corporation with the authority in its own articles to act as a registered agent in DC.
The registered agent’s address must be within the district, and the address given must be the physical street address, not just a post office box.
The LLC’s next most critical document is its operating agreement. Having an operating agreement is not officially required by the District of Columbia, but it’s a critical internal document that sets forth how the LLC will run—and therefore highly advisable to establish and maintain.
The operating agreement should list the LLC’s members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting. It can be amended or repealed as specified in the agreement itself or by state law.
The operating agreement can also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn’t have to. Often, however, it does include operating constraints and allowances that are already contained in state law and regulations. It also may contain constraints on the members’ authority to change or repeal the operating agreement or any provision thereof.
A District of Columbia LLC must have at least one member, who may be a natural person or a business entity. Members may acquire an interest in the LLC either in proportion to their contribution or in some other way that is in accordance with the LLC’s operating agreement.
The contributions of a member to the LLC may consist of cash, property, services rendered, or a binding obligation to contribute those in the future.
An LLC member may not resign except in accordance with the organization’s operating agreement or articles of organization. If a wrongful dissociation causes harm to the LLC, the member may be liable for those damages.
Unless the operating agreement states otherwise, a member who resigns will receive the fair value of his or her membership interest within a reasonable time after resignation. If the resignation is in violation of the operating agreement or the result of wrongful conduct, the LLC may offset the amount paid to the resigning member by the amount of damages caused by the breach or wrongful conduct, including the costs of obtaining replacement services owed to the LLC by the resigning member.
Managers are elected by the members, but unless otherwise stated in the articles or operating agreement, managers’ removal and election must be approved by those members owning at least a majority of profit interests in the LLC.
District of Columbia LLCs submit a Two-Year Report biannually with the DCRA, along with a registration fee of $200. The report must include:
It’s also a good idea to keep copies of the minutes of the various proceedings and committees meetings of the members and managers.
A District of Columbia LLC is dissolved when any one of the following events occurs:
An LLC by its nature normally offers some tax advantages over a corporate organizational structure, especially for taxes. This includes access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a “pass-through” entity for tax purposes, meaning that LLC owners report business profits and losses on their individual tax returns.
An LLC within the District of Columbia, however, is required to file as either a corporation or a partnership. District of Columbia LLCs must pay a 9.975 percent tax on all income earned in the District. The District of Columbia also charges a sales and use tax, with a 5.75 percent rate on most sales and a maximum rate of 14.5 percent.