Doing Business In Washington D.C
Directly investing into Washington, DC, creates the opportunity for strong firms to bring new and innovative practices to the city and region, which is ripe with federal contracting opportunities. In 2014, $19.2 billion worth of contractor work was performed in Washing-ton, DC – an 11% increase from 2013. Washington, DC, is a thriving marketplace for ideas, innovation, and invention. Among U.S. metropolitan areas, the region has the highest percentage of college graduates.2 More than 100 academic institutions operate programs and degrees in this region, which attract, educate, and help retain exceptional talent.
Small Business and Startup Environment
District of Columbia has 59,775 small businesses, according to the most current federal data available. Of those 59,775 small businesses in District of Columbia, 25,600 have employees. The remaining 34,175 are District of Columbia small businesses that have no employees.
The Washington, DC region is home to 400 international associations and 1,000 internationally owned companies. Fifteen of the Fortune 500 companies call this region home, and they represent a variety of industries from international hospitality with Hilton Worldwide and Marriott to finance with Capitol One and Fannie Mae. The region is home to engineering and defense giants with General Dynamics, Lockheed Martin, and the Computer Sciences Corporation, as well as technology firms like The Advisory Board, CoStar and Blackboard.
The DC region startup and technology scene us unlike any other, but that’s exactly what makes it one of the nation’s fasting growing tech hubs. The region is home to the federal government and the new headquarters for companies like Amazon. It’s full of prestigious hospitals and top universities with amazing programs in healthcare, cybersecurity, and entrepreneurship. Startups here will have to be flexible, innovative, and remote work friendly,
Step 1: Choose A Business Structure
The most common business structures are sole proprietorship, partnership, limited liability company (LLC), and a few different types of corporations—the standard corporation (often called a C corporation or “C corp”), the small business corporation (often called an S corporation or “S corp”), and the benefit corporation (often called a B corporation or “B corp”).
The most common business structures are:
Happens when you operate your business as yourself. There is no separate legal entity created; the law treats you and your business as one person. You are responsible and personally liable for all business activities or wrongdoing.
The same thing as a Sole Proprietorship, but just with 2 or more people. Like a Sole Proprietorship, a Partnership doesn’t create a separate legal entity and the partners are responsible and personally liable for any business activity or wrongdoing.
A more complex legal structure that requires a board of directors, corporate officers, and shareholders. Corporations don’t usually work for most small business owners since they face double taxation. Corporations can be beneficial to companies that are looking to raise capital investment, take the company public, or have large healthcare expenses for their employees. The most common types of companies that form Corporations are high-growth technology and startup companies.
Unlike a Sole Proprietorship or a Partnership, a Corporation is a separate legal entity from its owners (called shareholders). It provides them with personal liability protection.
A legal entity that combines the benefits of a Corporation and a Sole Proprietorship/Partnership.
An LLC in Washington D.C is a separate legal entity under the law. And like a Corporation, it provides personal liability protection for the owners. If the LLC is sued, the owner’s personal assets – like their home, cars, and bank accounts – are protected. And like a Sole Proprietorship/Partnership, an LLC has pass-through taxation (so there’s no double taxation).
A Washington D.C LLC is the most popular option and a good choice for people who want to run a small business for two reasons:
- Personal liability protection (personal assets are kept safe)
- No double taxation
Unlike a Sole Proprietorship (and a Partnership), your Washington D.C LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
And unlike a Corporation, your LLC is not subject to double taxation. Instead, your LLC’s profits will “pass-through” to your personal tax return and federal taxes are paid just once.
Step 2: Choose The Right Business Name
Choosing a business name is important, you want to make it easier for your customers to remember it, here are some tips:
- Avoid hard-to-spell names.
- Don’t pick a name that could be limiting as your business grows.
- Conduct a thorough Internet search.
- Search and purchase a domain name.
- Use a name that conveys some meaning.
- Conduct a trademark search.
Step 3: Register Your Business
Step 4: Obtain an EIN Tax Number
With limited exceptions, most businesses require an Employer Identification Number (EIN), also known as a Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN, you can’t hire employees or open a business bank account.
Step 5: Open A Bank Account
– Open a business bank account:
- Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
– Get a business credit card:
- Helps you separate personal and business expenses.
- Builds your company’s credit history, which can be useful to raise capital later on.
Step 6: Licenses & Permits
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
Here are some links for Washington D.C Businesses:
Selling products? Check Washington D.C Resale Permit
Step 7: Branding & Marketing
Your brand is the image customers have of your business, so it’s important to determine who is your audience and what is the message that you want to project. That way, your company’s image will be what you intend it to be. It should be strategic and intentional.
Step 8: Establish a Web Presence
Creating an optimized website helps you to gain important visibility for the right terms. A website is a powerful sales tool and one that allows you to address your customers’ concerns, give them the information they need to make a decision and create compelling calls to action.
In addition to a website, you should also consider other avenues for promoting your business online: