Washington, DC lesson 5 of 6
DC taxes: the unincorporated business franchise tax
This is the point most out of district accountants miss. DC taxes unincorporated businesses at entity level, so a pass-through LLC can owe DC tax even though it pays nothing at entity level anywhere else.
The unincorporated business franchise tax
DC imposes a franchise tax on unincorporated businesses, reported on Form D-30, at the District's business franchise rate on DC net income. There is also a minimum tax, which DC sets by reference to DC gross receipts, with a lower minimum for businesses at or below $1 million of DC gross receipts and a higher minimum above that. Confirm the current rate and minimum in the D-30 instructions for your tax year.
Because this applies at entity level, DC resident members can face DC personal income tax on distributions as well. Plan the combined effect with an accountant rather than assuming pass-through treatment.
Other DC registrations
Register the business with the Office of Tax and Revenue on MyTax DC. If you sell taxable goods or services you register for sales and use tax. If you have employees you register for withholding and unemployment insurance. Personal property used in the business is also reportable in DC.
Federal position
Federally the LLC is treated as a disregarded entity or a partnership by default, unless you make an election. An S corporation election is a federal tax status, not a different DC entity, and it does not remove the DC unincorporated business franchise tax analysis, so take advice before electing.
Key takeaways
- DC taxes unincorporated businesses at entity level on Form D-30.
- A minimum tax applies, tiered by DC gross receipts.
- Register with the Office of Tax and Revenue as soon as you form.
Official sources
Or let us file your Washington, DC LLC for you
Everything above is yours to use for free. If you would rather hand it over, we prepare and file the Articles of Organization for a Domestic Limited Liability Company (Form DLC-1), act as your registered agent, and track your ongoing deadlines.
Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team