Form a Corporation in Washington DC.

Articles of Incorporation

Before it can start conducting business in the District, a new DC corporation must file articles of incorporation, along with a minimum $120 incorporation fee ($100 filing fee and a minimum $20 authorized stock fee). You may authorize up to $100,000 of capitalization (shares) in your articles for this minimum $20 fee—for example, 100,000 shares with a par value of $1 each or 200,000 with a par value of 50 cents each. Shares without par value are given a $1 per share value for purposes of this fee, so you can authorize up to 100,000 shares without par value for the minimum $20 authorized stock fee.

Two original signed copies of the articles, along with a Written Consent of Registered Agent, must be delivered by at least one incorporator. The incorporator may be one of the initial directors, or anyone else as long as they are at least 18 years of age.

The following information must be included in the articles of incorporation:

Most incorporators authorize only common shares of stock with equal voting, dividend, and liquidation rights, and no special restrictions. If you want to authorize the maximum number of common shares without par value, you can state that in your articles. Or, to authorize par value shares, you can include a statement along the lines of, “The aggregate number of shares the corporation is authorized to issue is 100,000, with a par value of $1.00 each.”

If you want to authorize a special class or classes of shares, you must state the name of each class or series, the number of shares in each, and the par value (if any) of each class or series. Another alternative is to state that the shares in each class or series are without par value.

If you do authorize separate classes or series of shares, you should also state any applicable rights and/or restrictions.

District law requires that a corporation obtains at least $1,000 of capitalization before it starts doing business. Your financial records should show that this much cash or property was paid into your corporation by the initial shareholders.

Registered Agent and Office

Every District of Columbia corporation must have a registered agent in the district—the person or office designated to receive official administrative and legal correspondence. The registered agent is required to sign the articles of incorporation, indicating acceptance of the appointment as such.

The registered agent must be either a DC resident or a corporation authorized to conduct business there. In either case, the agent’s business office must be the same as the registered office. The registered office may be the same as the corporation’s place of business.

Bylaws

Bylaws lay out the corporation’s basic managerial and legal operating principles that manage their internal affairs. The District of Columbia corporations must keep a copy of their bylaws at their principal executive office, but are not required to file them with the state. At its initial meeting, the incorporators or the board of directors should adopt corporate bylaws, and then keep them updated as time goes on.

The board of directors of a corporation may adopt, amend, or repeal bylaws, unless the articles reserve this right to the shareholders. Bylaws normally address:

Directors

Officers are listed in the initial bylaws or elected by the board of directors, and may appoint other officers in accordance with the bylaws. At least one officer should have the responsibility of preparing minutes of director and shareholder meetings, and for maintaining and authenticating corporate records.

Requirement Reports

DC corporations must file a report with the mayor’s office by the end of the second calendar month after delivery of the corporation’s original articles, and every year after that. This report must include the corporation’s name, its jurisdiction of incorporation, and any information in its articles that has since changed since the last report.

If shareholder requests it, a DC corporation must send that shareholder its most recent annual and published reports.

Taxes

The District of Columbia imposes a corporate franchise tax based on net taxable income, and it also imposes an unincorporated business tax on unincorporated businesses. The minimum tax is $100 per year, which includes a surtax.

District corporations must pay a 9.975 percent tax on all income earned there. The District also charges a sales tax of 5.75 percent rate on most sales and a maximum rate of 14.5 percent.