Last updated: April 30, 2026

Starting a Business in Washington DC: Licenses, Permits & Requirements (2026)

Washington DC is not a state, and that distinction shapes nearly every step of starting a business here. The District of Columbia operates under congressional Home Rule with a thirteen-member DC Council instead of a state legislature, and Congress retains override authority over District laws. Practically, that means DC has its own agencies, its own tax code, and its own licensing regime that look superficially like a state’s but answer to a different governance structure. The most visible example is the Basic Business License (BBL) — a single umbrella license that applies to virtually every business operating in the District, with category-specific endorsements layered on top. No state outside DC uses this exact umbrella-and-endorsement model.

Three more recent changes shape what 2026 operations look like. First, DCRA was split into two agencies on October 1, 2022: the Department of Licensing and Consumer Protection (DLCP) handles entity filings, the BBL, and trade names, while the Department of Buildings (DOB) handles permits, inspections, and contractor licensing. Most older how-to guides still reference DCRA as if it existed — it does not. Second, the DC Universal Paid Leave (UPL) employer payroll tax is 0.75% as of July 8, 2024, up from the 0.26% rate that applied through 2023; this is one of the higher employer-paid leave premiums in the country and many out-of-date sources still quote the lower number. Third, DC’s minimum wage rises from $17.95 to $18.40 per hour on July 1, 2026, indexed annually to CPI. This guide compiles the specific DC agencies, portals, fees, and 2026 figures that apply to starting a business in the District — sourced from DLCP, DOB, the Office of Tax and Revenue (OTR), the Department of Employment Services (DOES), and DC Health.

DC Business Requirements at a Glance

Requirement	Agency / Portal	Cost	Timeline
LLC Certificate of Organization	DC Department of Licensing and Consumer Protection (DLCP) via mybusiness.dc.gov	$99 online/mail; $199 in person; +$100 for same-day expedited in-person	Immediate online; 3-5 business days mail
Biennial Report (LLC, corp, LP, LLP)	DLCP Corporations Division	$300 every 2 years; $100 late penalty after April 1	Due April 1 in the year after formation, every 2 years
Trade Name (DBA) registration	DLCP Corporations Division	$55 online (varies by entity)	Immediate online
Federal EIN	IRS.gov	Free	Immediate online
Basic Business License (BBL) — 2-year	DLCP Business Licensing Division	$70 application + $25 per endorsement + 10% technology surcharge	Required before opening; varies by endorsement category
Clean Hands Certification	DC Office of Tax and Revenue (OTR)	Free; must owe $100 or less to DC government	Required before BBL approval
Home Occupation Permit (if running from a residence)	Department of Buildings (DOB)	$73	Required before BBL if home-based
Certificate of Occupancy (commercial premises)	Department of Buildings (DOB)	Varies by square footage; ~$36 minimum	Required before opening at a commercial address
Sales & Use Tax Registration	MyTax.DC.gov (OTR)	Free; 6.0% rate through Sept 30 2026, 7.0% from Oct 1 2026	Before first taxable sale
Combined Business Tax Registration (FR-500)	OTR via MyTax.DC.gov	Free	Before first payroll or taxable activity
Universal Paid Leave (UPL) employer tax	DOES Office of Paid Family Leave	0.75% of gross wages (employer-paid; no wage cap)	Quarterly returns via ESSP portal
Unemployment Insurance Tax	DC Department of Employment Services (DOES)	New employer rate 2.7%; taxable wage base $9,000 (2026)	Register within 30 days of hiring first employee
Workers Compensation Insurance	DOES Office of Workers Compensation	Varies by industry/payroll; private market	Required before first employee’s first day
New Hire Reporting	DC New Hire Registry (OTR)	Free	Within 20 days of hire

How to Start a Business in Washington DC (Step by Step)

Step 1: Form Your DC LLC Through DLCP

File Articles of Organization (Form DLC-1) with the DC Department of Licensing and Consumer Protection (DLCP) Corporations Division through the My DC Business Center (mybusiness.dc.gov). Filing fee: $99 online or by mail. In-person filings are $199, with an additional $100 for same-day expedited processing. Online filings approve immediately; mail filings typically process in 3-5 business days.

Your LLC name must include “LLC,” “L.L.C.,” “Limited Liability Company,” or an authorized abbreviation, and must be distinguishable from existing DC entities. Run a name check at the DLCP CorpOnline portal before filing.

Registered agent: Every DC LLC must designate a registered agent with a physical DC street address (no P.O. Boxes) available during business hours. A DC-resident manager or member can serve, or use a commercial registered agent service ($49-$150 per year).

Biennial Report: DC does not require an annual report — instead it requires a Biennial Report every two years. The fee is $300, due April 1 in the year following the year your LLC was formed and every two calendar years thereafter. A $100 late penalty applies the day after April 1; if you do not file by September 1, DLCP can administratively dissolve your LLC. File through the My DC Business Center.

Trade Name (DBA): If you do business under any name other than your registered legal name, file a Trade Name registration with DLCP before using it. The trade name registration is filed alongside or after entity formation.

Get your free federal EIN at IRS.gov — you’ll need it before registering for DC tax accounts, opening a business bank account, or hiring.

Step 2: Get Your Basic Business License (BBL)

Almost every business operating in the District needs a Basic Business License (BBL) from the DLCP Business Licensing Division. The BBL is DC’s umbrella license, and it is layered with one or more category endorsements that describe what the business actually does (General Business, Mobile Food, Public Hall, Cleaning Services, Child Development Facility, Charitable Solicitation, and dozens of others).

Standard BBL fee structure (2026):

• Two-year BBL: $70 base + $25 per endorsement + 10% technology surcharge
• Four-year BBL: $140 base + $25 per endorsement + 10% technology surcharge
• Six-month BBL (limited categories): $35 base + $12.50 per endorsement
• Late renewal: $250 the day after expiration; capped at $500 after 31 days

Required before BBL approval:

• Clean Hands Certification — your business must not owe more than $100 to the DC government (taxes, fees, or judgments). DLCP pulls this automatically from OTR records.
• Home Occupation Permit (HOP) if your business is based at a residential address — this comes from the Department of Buildings (DOB) and runs about $73. Many BBL endorsements impose additional restrictions on home-based operation.
• Certificate of Occupancy (CofO) if you are operating from a commercial space — this also comes from DOB and confirms the use is allowed under DC zoning.

Apply for the BBL online through My DC Business Center, by mail, or in person at 1100 4th Street SW, 2nd Floor, Washington, DC 20024 — the consolidated DLCP/DOB Permit Center. Phone: (202) 671-4500.

Step 3: Register for DC Taxes Through MyTax.DC.gov

DC taxes are administered by the Office of Tax and Revenue (OTR). Register through MyTax.DC.gov using Form FR-500 (Combined Business Tax Registration), which sets up your tax accounts in one transaction.

DC Sales and Use Tax

DC’s general sales tax rate is 6.0% through September 30, 2026. Under the Sales Tax Increase Delay Amendment Act of 2025, the rate increases to 7.0% starting October 1, 2026 — budget for this and update your point-of-sale system before that date. Unlike most states, DC has no county or city add-ons — the District-wide rate is the only rate. Special rates apply to specific categories: 10.25% on prepared food, restaurant meals, and alcohol consumed on premises; 14.95% on hotel and short-term rentals; 18% on commercial parking. Verify rates for your specific category at otr.cfo.dc.gov.

DC is one of 17 states that tax cleaning and janitorial services — charges for real property maintenance (floor, wall, ceiling, and window cleaning; pest control; exterior building cleaning; restroom cleaning and stocking; ground maintenance) are subject to the general 6.0%/7.0% rate. Salon services, daycare, and personal services (including private investigation) are not subject to sales tax. Service businesses still need to register with OTR even if they do not collect sales tax, because the Combined Business Tax Registration also handles the franchise tax.

DC Business Franchise Tax (LLC, partnership, sole prop, corporation)

This is the tax most often misunderstood about DC. The District levies an Unincorporated Business Franchise Tax (UBT) at 8.25% on the net income of LLCs, partnerships, and sole proprietorships with DC gross receipts over $12,000. Two important details:

• 30% salary allowance: Owners of unincorporated businesses can deduct an amount equal to 30% of net income as a reasonable salary allowance, plus a $5,000 exemption, before applying the 8.25% rate.
• Minimum tax: $250 if DC gross receipts are $1 million or less; $1,000 if DC gross receipts exceed $1 million.
• Form D-30 filed annually with OTR.

C-corporations pay the Corporate Franchise Tax at the same 8.25% rate on DC-source net income, with the same $250/$1,000 minimum. Corporations file Form D-20. The DC corporate franchise rate is among the higher rates nationally and has not phased down — unlike North Carolina (phasing to 0% by 2030), DC has no scheduled corporate-tax reduction.

DC Individual Income Tax (Owners)

Pass-through income flows to LLC members and sole proprietors who pay DC individual income tax on their personal returns. DC uses a seven-bracket graduated structure (2025-2026 tax years):

• 4% on income up to $10,000
• 6% on $10,001-$40,000
• 6.5% on $40,001-$60,000
• 8.5% on $60,001-$250,000
• 9.25% on $250,001-$500,000
• 9.75% on $500,001-$1,000,000
• 10.75% on income over $1,000,000

The 10.75% top rate is the third highest in the country (behind California 13.3% and Hawaii 11%). Pair the 8.25% franchise tax with the personal-rate flow-through and DC has one of the heaviest combined small-business tax loads in the United States. Plan for it.

Step 4: Register for UI, Universal Paid Leave, and Withholding

If you are hiring, register with the DC Department of Employment Services (DOES) through the Employer Self Service Portal (ESSP) within 30 days of hiring your first employee.

DC Unemployment Insurance

DC’s UI taxable wage base is $9,000 per employee for 2026 — one of the lowest in the country (Colorado is $30,600, Texas is $9,000, New York is $13,000). The new-employer rate is 2.7%. Experienced employers see rates from 1.9% to 4.4% (positive-rated) or 6.2% to 7.4% (negative-rated). Quarterly returns and payments are due through ESSP.

DC Universal Paid Leave (UPL) — the major V1 correction

The DC Paid Family Leave (PFL) employer tax is 0.75% of total gross wages, fully paid by the employer, with no wage cap and no employee deduction allowed. This rate has been in effect since July 8, 2024 (the rate was 0.26% before that — many out-of-date guides still quote the lower number). At 0.75%, DC’s UPL premium is meaningfully higher than Colorado FAMLI (0.88% but split between employer and employee for 10+-employee businesses) and one of the highest pure-employer-paid leave premiums in the country.

Employees covered by UPL receive up to 12 weeks of parental leave, 12 weeks of family leave, 12 weeks of medical leave, and 2 weeks of prenatal leave per benefit year. Register through ESSP at the same time as UI; quarterly UPL returns are filed through the same portal.

DC Income Tax Withholding

If your employees work in DC, register for DC withholding through OTR (also via FR-500). Filing frequency depends on your withholding volume. DC residents are taxed on all wages; non-residents are not subject to DC income tax under the federal home-rule reciprocity rule (DC cannot tax non-resident wages, which is unique to the District).

Accrued Sick and Safe Leave (ASSLA) — separate from UPL

DC has a paid sick leave law that operates independently of UPL. Under the Accrued Sick and Safe Leave Act of 2008 (as amended), employers must accrue paid sick time based on size:

• 1-24 employees: 1 hour per 87 hours worked, capped at 3 days/year
• 25-99 employees: 1 hour per 43 hours worked, capped at 5 days/year
• 100+ employees: 1 hour per 37 hours worked, capped at 7 days/year

This is in addition to the 12+12+12+2 weeks of paid leave under UPL. Post the ASSLA poster and keep accrual records for at least three years.

Step 5: Get Workers Compensation and Industry-Specific Licenses

Workers Compensation

Under D.C. Code § 32-1503, every DC employer with one or more employees must carry workers compensation insurance — full-time, part-time, or family. Domestic workers are covered when they work 240 hours or more in a calendar quarter. Coverage is purchased from any private insurer licensed in the District; DC does not have a state fund or a market-of-last-resort insurer like Pinnacol in Colorado or Texas Mutual in Texas. Self-insurance is allowed with DOES approval for larger employers. Penalties for operating without coverage include fines and personal liability for any injury claim. The DOES Office of Workers Compensation at (202) 671-1000 administers the program.

Industry-Specific Licensing Through DLCP and Sister Agencies

Many industries require additional state-level licensing on top of the BBL. The agency depends on the industry:

• DLCP Occupational and Professional Licensing Boards — cosmetologists, barbers, electricians, plumbers, real estate agents, professional engineers, architects
• Department of Buildings (DOB) — HVAC contractors (Master Mechanical License), general contractors, electricians (trade license layer), plumbers, refrigeration and gas fitting
• Metropolitan Police Department (MPD) Security Officers Management Branch — private investigators and security officers (under DCMR Title 17 Chapter 20)
• Office of the State Superintendent of Education (OSSE) — child development facilities (daycare, preschool)
• DC Health — food service establishments, mobile food vendors, body art establishments
• Department of Energy and Environment (DOEE) — commercial pesticide applicators

DC’s Unique Tax and Payroll Environment

Three DC-specific items will reshape your business model compared to operating in most states:

1. Stacking franchise tax + individual tax on small business income. An LLC owner in DC pays the 8.25% Unincorporated Business Franchise Tax at the entity level (after the 30% salary allowance and $5,000 exemption), and then the owner pays DC individual income tax on the salary or distribution at rates up to 10.75%. Most states tax pass-through income only once, on the owner’s personal return. This double-counted structure means DC’s effective tax burden on a profitable LLC can exceed 18% combined — before federal tax. Tax planning matters more here than in most jurisdictions.

2. Universal Paid Leave at 0.75% is a real cost. An employee earning $80,000 generates $600 in UPL premium per year, on top of UI tax (~$243 at 2.7% on the $9,000 base) and the employer share of FICA. The premium is owed on every dollar of wages with no cap, so a $300,000 high-earner costs the employer $2,250 in UPL alone. Factor this into compensation planning, especially for professional service firms.

3. Initiative 82 was scaled back in 2025. When voters approved Initiative 82 in 2022, the goal was to phase tipped wages up to the full minimum wage by July 2027. The DC Council voted on July 28, 2025 to amend that schedule. As of 2026, the tipped minimum wage stays at $10.30 per hour starting July 1, 2026 (CPI-indexed from $10.00); it will rise to 60% of the full minimum wage by 2028 and is now capped at 75% of the full minimum wage by 2034 — not eliminated. Restaurant and salon operators who model labor cost on the original Initiative 82 schedule will overstate their July 2026 wage exposure.

Washington DC Market Context: Federal Workforce, Neighborhoods, and Demand

DC’s small-business demand profile differs from any state’s because the federal government is the District’s largest employer and largest economic anchor. About 25% of DC employment is federal civilian or military, and federal contracting drives a significant share of the rest. That structure shapes which small businesses thrive here:

• Weekday lunch concentration: Food trucks, cleaning services, and quick-service businesses see Monday-Friday demand peaks tied to office hours. The federal-employee base creates a steeper weekday-to-weekend ratio than most cities. Weekend business is heavier in residential neighborhoods (Adams Morgan, U Street, Capitol Hill) and tourist zones (National Mall, Penn Quarter).
• Government cycle sensitivity: Federal shutdowns, continuing-resolution debates, and election-year policy shifts compress demand for premium services. Service businesses that depend on federal-employee discretionary spending should keep three months of operating capital as a baseline.
• High-density residential neighborhoods: Capitol Hill, Dupont Circle, Logan Circle, Georgetown, Adams Morgan, U Street, Mount Pleasant, NoMa, Navy Yard, and the H Street corridor have very different demographic profiles, regulatory enforcement intensity, and competitive density. A cleaning service targeting Georgetown looks nothing like one targeting Anacostia.
• Federal contracting opportunity: Many DC small businesses pursue federal contracts through SAM.gov, GSA Schedules, and the SBA’s 8(a) program. DC’s high concentration of federal procurement officers, contracting officers, and prime contractors creates relationship density that does not exist outside the Beltway.
• Tourism and hospitality: Approximately 25 million annual visitors create steady demand for hotels, food service, and short-term-rental ancillary services. The 14.95% hotel tax and the 10.25% prepared-food tax are paid disproportionately by tourists.

DC’s small geographic footprint (68 square miles) means there is no rural-versus-urban divide within the District. Every operator deals with the same regulatory regime, but neighborhood-level demand variation is significant.

Washington DC Business Guides by Industry

Each industry has different licensing, BBL endorsement, insurance, and operational requirements in DC. Pick your business type for the full breakdown:

• How to Start a Cleaning Service in Washington DC — BBL Cleaning Services endorsement, UPL/sick leave registration, no DC sales tax on cleaning services
• How to Start a Food Truck in Washington DC — Mobile Roadway Vending program, DDOT zones, DC Health Mobile Vending Permit, FTAMW industry network
• How to Start a Daycare in Washington DC — OSSE Child Development Facility license, Capital Quality 5-tier rating, Universal Pre-K revenue opportunity
• How to Start an HVAC Business in Washington DC — DOB Master Mechanical License, DC Construction Codes, Building Energy Performance Standards (BEPS) retrofit market
• How to Start a Hair Salon in Washington DC — DLCP Board of Barber and Cosmetology, salon shop BBL endorsement, Initiative 82 booth-rent impact
• How to Start a Landscaping Business in Washington DC — DOEE pesticide certification, Miss Utility 48-hour rule, Urban Forestry Administration tree rules
• How to Start a Private Investigation Business in Washington DC — MPD Security Officers Management Branch, DCMR Title 17 Chapter 20, one-party consent recording

Key DC Business Resources

Resource	What It Covers
DC DLCP	Entity formation, BBL, trade names, professional licensing boards
My DC Business Center	Online business registration, BBL applications, biennial reports
DC Department of Buildings (DOB)	Construction permits, contractor licensing (HVAC, electrical, plumbing), Certificate of Occupancy, Home Occupation Permits
DC Office of Tax and Revenue	Franchise tax, sales tax, income tax, withholding, Clean Hands Certification
MyTax.DC.gov	FR-500 Combined Business Tax Registration, all DC tax filing
DC DOES	Unemployment insurance, Universal Paid Leave, workers comp, wage and hour
DC Office of Paid Family Leave	UPL employer registration, quarterly returns (ESSP), employee benefit information
DC Health	Food establishments, mobile food vendors, body art, personal care services
OSSE	Child Development Facility licensing, Universal Pre-K, Capital Quality rating
DOEE	Pesticide applicator certification, environmental permits
DC New Hire Registry	Report new employees within 20 days of hire

Frequently Asked Questions

How much does it cost to start an LLC in Washington DC?

Filing a Certificate of Organization with DLCP costs $99 online or by mail, $199 in person, with an extra $100 for same-day expedited in-person processing. After formation, DC LLCs pay a $300 Biennial Report due April 1 in the year following formation and every two years thereafter. You’ll also need a Basic Business License (BBL) before opening — $70 plus $25 per endorsement plus a 10% technology surcharge for a two-year license. Total first-year costs typically range from $225 to $600 depending on endorsements, registered agent service, and whether you need a Home Occupation Permit (~$73) or Certificate of Occupancy.

Does Washington DC require a general business license?

Yes — almost universally. DC requires a Basic Business License (BBL) for nearly every business operating in the District, with one or more category endorsements describing the activity (General Business, Mobile Food, Cleaning Services, Public Hall, Child Development Facility, etc.). The BBL is issued by DLCP and renewed every two years. Standard fee: $70 application + $25 per endorsement + 10% technology surcharge for a two-year license. Apply through mybusiness.dc.gov. Clean Hands Certification (no DC tax debts over $100) is required before approval.

What is DC’s Universal Paid Leave employer tax in 2026?

The DC Universal Paid Leave (UPL) employer payroll tax is 0.75% of all gross wages, fully paid by the employer with no wage cap and no employee deduction allowed. This rate took effect July 8, 2024 — up from 0.26% in 2023 — and remains at 0.75% throughout 2026. UPL provides covered DC employees with up to 12 weeks of parental leave, 12 weeks of family leave, 12 weeks of medical leave, and 2 weeks of prenatal leave per year. Register and file quarterly through the DOES Employer Self Service Portal (ESSP). Many older how-to guides still quote the 0.26% rate — those are wrong for 2024 onward.

What is DC’s minimum wage in 2026?

DC’s minimum wage is $17.95 per hour through June 30, 2026, then $18.40 per hour effective July 1, 2026, indexed annually to CPI under the Fair Shot Minimum Wage Amendment Act of 2016. The tipped minimum wage stays at $10.00 per hour through June 30, 2026, then rises to $10.30 per hour on July 1, 2026. Initiative 82 (the 2022 ballot measure to eliminate the tipped sub-minimum wage by 2027) was amended by the DC Council on July 28, 2025 — the tipped wage now caps at 75% of the full minimum wage by 2034 instead of being eliminated. DC’s Living Wage (paid by DC government contractors) is set separately and higher.

What is DC’s sales tax rate in 2026?

DC’s general sales and use tax rate is 6.0% through September 30, 2026, increasing to 7.0% starting October 1, 2026 under the Sales Tax Increase Delay Amendment Act of 2025. There are no county or city add-ons — the District-wide rate is the only rate. Special category rates: 10.25% on prepared food, restaurant meals, and on-premises alcohol; 14.95% on hotel and short-term rentals; 18% on commercial parking. Most professional services (cleaning, salon, PI) are not taxable; tangible personal property and certain enumerated services are. Register at MyTax.DC.gov via Form FR-500.

What is the DC business franchise tax?

DC levies an Unincorporated Business Franchise Tax (UBT) at 8.25% on the net income of LLCs, partnerships, and sole proprietorships with DC gross receipts over $12,000 (after a 30% salary allowance and a $5,000 exemption). C-corporations pay the same 8.25% rate under the Corporate Franchise Tax. The minimum tax is $250 if DC gross receipts are $1 million or less, or $1,000 if gross receipts exceed $1 million. File Form D-30 (unincorporated) or D-20 (corporate) annually with OTR. This franchise tax stacks on top of the personal DC income tax (4% to 10.75%) that owners pay on distributions or salary — meaning DC has one of the heaviest combined small-business tax loads nationally.

Does DC require workers compensation insurance for one employee?

Yes. Under D.C. Code § 32-1503, every DC employer with one or more employees — full-time, part-time, family, or domestic (when worked 240+ hours in a quarter) — must carry workers compensation insurance before the first day of work. DC does not have a state-fund or market-of-last-resort insurer; coverage is purchased from any private insurer licensed in the District, or self-insurance can be approved by DOES for larger employers. Penalties for operating without coverage include fines and personal liability for any workplace injury claim. Contact the DOES Office of Workers Compensation at (202) 671-1000.

What happened to DCRA, and which agency do I file with now?

DCRA (the former Department of Consumer and Regulatory Affairs) was split into two new agencies on October 1, 2022 under the Department of Buildings Establishment Act of 2020. The Department of Licensing and Consumer Protection (DLCP) now handles entity filings (LLC, corp, LP, LLP), the Basic Business License (BBL), trade names, biennial reports, and consumer-protection enforcement. The Department of Buildings (DOB) now handles construction permits, Certificates of Occupancy, Home Occupation Permits, contractor licensing (HVAC Master Mechanical, electrical, plumbing), and building inspections. If a website or older guide tells you to file with DCRA, that information is out of date — use DLCP for entity and licensing matters and DOB for construction-related permits.