Washington DC Business License

If you plan to open a business in Washington DC, one of the key requirements you’ll need to satisfy is obtaining a Washington DC business license.

This article covers the essential regulations and licensing requirements that you’ll need to consider, their associated costs, and the step-by-step process that you’ll need to follow in order to begin operating.

Let’s get started.

Do I Need a Business License in Washington DC

In Washington D.C., businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Basic Business Licenses: The issuer of the basic business license (BBL) in Washington D.C. is the Department of Licensing and Consumer Protection (DLCP), Business and Professional Licensing Administration, Business Licensing Division. It’s a mandatory general business license for all businesses operating within the district
• Sales and Use Tax Permits: Washington D.C. requires a seller’s permit — also known as a sales and use tax permit — for businesses that sell tangible personal property or provide certain services within the district. Issued by the Washington DC Office of Tax and Revenue (OTR), this permit is a part of the business tax registration process
• Professional Licenses: A professional license allows you to legally practice or offer specialized services in specific professions. For example, the district’s HVAC contractor license is for individuals or businesses that provide heating, ventilation, and air conditioning services. The DLCP issues these professional licenses — specifically through its Occupational and Professional Licensing (OPL) division. Lawyers and doctors require licensing from the Washington D.C Bar and the Board of Medicine under the Washington DC Health Department, respectively
• Zoning Permits: If you plan to run a business from home in the district, you can quickly get an expedited home occupation permit (eHOP) when applying for a basic license through the My DC Business Center. All home businesses also need the standard home occupation permit (HOP). If your business will operate from an office, you must apply for a certificate of occupancy (COO)

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Washington DC plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: Washington DC provides local business licenses and permits specific to the district. Businesses offering food-related services will need a food services license, for example, while entities delivering health-related services will need a health services license. Meanwhile, businesses that cater to lodging and rental housing needs must obtain a lodging rental housing license. The DLCP issues these local licenses
• State: If you want to open a business in Washington D.C., you’ll need a BBL in order to operate legally within the district
• Federal: If your business engages in certain industries or undertakes specific business activities, it may need a federal license. This applies to a variety of sectors, such as alcohol distribution, aviation, firearms and explosives handling, radio and TV broadcasting, and transportation, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Washington DC

In order to get your business license(s) in Washington DC, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Washington DC, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Washington DC to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Washington DC Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: To apply for local business permits and licenses in Washington D.C, visit the DLCP Business License Center at 1100 Fourth St., S.W., 2nd Floor, Washington, DC 20024. Once there, use one of the kiosks to apply. You can find more details on the DLCP website
• Statewide Licenses: You can apply for a BBL online through the My DC Business Center website. Alternatively, you can download a license application form from the BBL Forms section of the Department of Consumer and Regulatory Affairs (DCRA) website. During the BBL online application process, you’ll need to complete a “Clean Hands” verification. Learn more about the “Clean Hands” certification on the DLCP website. For professional licenses, you’ll need to go through Washington DC’s OPL division
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: The Washington DC government provides a step-by-step guide on how to obtain a BBL, which includes corporate and trade name registration, registration with the IRS, and more. You can find this guide on the DLCP website.

Step 4: Renewal of Licenses and Permits

In Washington D.C., businesses must renew their BBLs periodically. For more details about the renewal process and its associated fees, visit the Basic Business License Renewal Overview page.

Each specific license category may have its own set of requirements. You can find detailed information about these licenses on the Business Licensing FAQs page.

Alternatively, you can use a third-party service or a professional attorney for this process. This can be a good choice if you want to ensure that you avoid potential fines, as well as if you want to be as time-efficient as possible.

How Much is a Business License in Washington DC

In Washington D.C., the exact fees for business licenses, including the BBL, can vary based on the type of business and other factors.

A two-year BBL costs $70, for example, plus an extra $25 for each added endorsement. A four-year BBL costs $140 plus $25 for each endorsement while a six-month BBL costs $35 plus an additional $12.50 for every endorsement.

A BBL endorsement defines the kind of business you’re running. When applying for a BBL, you select an endorsement that matches your business type, such as “retailer” for selling goods or “home occupation” for home-based businesses. Each endorsement has its own requirements and fees.

Licensing costs also can also vary based on the specific license category and other local requirements. For example, the fee for a lodging rental housing license varies based on the number of units managed by an individual business. Specifically, the fee for three units is $453.20 while four units will cost $508.20 and so on.

Knowing the costs of required licenses before starting a business in Washington D.C. is important for planning your budget, avoiding surprise costs, staying compliant, and running your business smoothly. Upfront preparation will help you make good choices and set your business up for success.