MOVING UP: Starting a Small Business in DC

Scrabble letters spelling out "START"

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In my last column, I explained how companies are having employees become independent contractors and avoid almost all regulations and taxes. In order to take advantage of being an independent contractor, it is very important to set yourself up as a business so you do not get surprised by the requirements. The first thing to do is determine the structure you will use. There are several options: You can start a sole proprietorship, which is the easiest to begin; or you can start a partnership; or you can incorporate or start a limited liability company.

You will file the paperwork to start your business at the Department of Consumer and Regulatory Affairs. They are located at 1100 4th Street SW. You can call them at (202) 442-4400 and their website is dcra.dc.gov. Their website has many of the forms you need and you can send them in online or you can get help at their office. They are open from 8:30 a.m. to 4:30 p.m., except Thursday when they open at 9:30 a.m. There are several things you need to fill out, including a basic business license and also paperwork for the city’s “clean hands” tax compliance measure. One important thing about the business type is determining what you need for filing taxes. If you start a small business and only employ yourself, you will be able to use your Social Security Number (SSN). If on the other hand, you are planning on employing others, you will need to obtain an Employer Identification Number (EIN). Before you register with the District, you will want to set up a business bank account that is totally separate from your personal checking account. Get a business address: you can rent a P.O. box at a UPS store, Mailboxes, etc, or the post office. Then you will want to set up a business email account and purchase a cell phone. You can get a small no frills phone to start until your business is generating enough profit to get a smartphone for business use. After you have gotten started, you should set up a page on Facebook, Twitter, and build a website to promote your business. There are many free and low-cost websites that will help you build your website. You can do it from any computer, even at a public library. This may seem overwhelming, but the objective of this is to make sure you do not get surprised.

As I have stated before, many companies don’t tell you that you are an independent contractor until they send you the 1099 form at tax time. By then it is too late and you will be staring at some tax bills and penalties. If you know what you are facing ahead of time, you can be in control. One important thing to remember as well is even if you are based in the District, if your business will cross over the river to Virginia or Maryland, you may need to file additional paperwork to comply with their laws. For example, if you started a house cleaning or catering business, you would want to fill out the paperwork if your clients were in either of those states since you would have to collect sales tax and comply with any regulations those two states have.

Hopefully this will help you understand the different things to do to start a business. Make sure to visit the DCRA and use their resources. If you need help getting started, please visit SCORE. It is the Service Corps of Retired Executives and it is staffed by people who used to be executives in the business world and want to mentor new business owners. The Washington DC chapter is located at 409 3rd St SW suite 100A. You can call them at (202) 619-1000.

Arthur Johnson is a volunteer writer focusing on finance and economic issues in his column Moving Up.


Region |Washington DC

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