Form a General Partnership in District of Columbia (DC)

You’ve formed a general partnership when you and someone else agree to create a for-profit business as co-owners. You don’t need to register as a general partnership in the District of Columbia in most circumstances. However, D.C. may require you to obtain a business license and register to pay taxes for specific business activities.

Use our step-by-step guide on how to form a general partnership in the District of Columbia.

Step 1: Determine if you should start a general partnership

Forming a partnership in the District of Columbia can be simple and offer tax benefits to owners. Nonetheless, the partnership might not be the best business structure for your needs. Take some time to consider your business plan. Then, review the pros and cons of the general partnership in Washington, D.C.:

Pros

The partnership is a popular business form and benefits many businesses because:

• It’s easy to form
• It’s simple to maintain
• Straightforward distribution of losses and profits
• Pass-through taxation (no entity-level taxes)

The partnership owners can choose to have the partnership last for a specified amount of time or through the completion of a specific venture. Therefore, the partnership is a good structure for short-term projects. On the other hand, the partnership might not be the best fit if you plan to run the business long-term, transfer your business interests, or leave a legacy.

Cons

With the partnership’s simplicity come the drawbacks, including:

• Joint and several liability: if the partnership doesn’t pay its debts, creditors could reach the individual partners’ personal assets
• Shared responsibility for a partner’s negligence or malpractice
• Stricter requirements to transfer ownership
• Limited options for raising capital

Before you make any binding decisions, be sure to chat with your legal and financial advisors. While we’ve shared the general pros and cons of the partnership structure, only a registered professional can review your circumstances and recommend the right legal entity for your needs.

Step 2: Choose a business name

Once you’ve decided on a business structure, the next step is to choose a business name. Because there’s no formal District of Columbia general partnership registration process, the District recognizes unregistered general partnerships by the last names of the partners. For example, if your name is Carrie Hernandez and your partner’s name is Whitney Smith, your business name could be “C. Hernandez and W. Smith Business.” If the partners want to use a different name, you will need to register a DBA name.

Step 3: File a DBA Name (if needed)

When your business operates under a name that doesn’t contain the partners’ last names, the law requires the business to register that name as a trade name. Sometimes called a “doing business as,” “DBA,” or “assumed” name, a trade name, properly registered, allows the public to search for and identify the business owners. The trade name you use must be different from other registered or reserved business names or trade names. Once you’ve selected a unique name, the partners will submit their trade names to the Mayor. If you’re not committed to a name yet, you can register your prospective name with the Mayor for 120 days. 

Step 4: Draft and sign partnership agreement

When you start your partnership, it’s best to write a Washington, D.C. general partnership agreement. The partnership agreement provides rules for operating the business and what to do if the partners disagree. You can include provisions specifying when a partner can leave the partnership (dissociate), what events will cause the partnership to dissolve, and what obligations the partners have to the partnership and each other. If you don’t have a Partnership Agreement, the courts will resolve ownership disputes following the default rules in the Uniform Partnership Act of 2010.

Step 5: Obtain licenses, permits, clearances

While your general partnership doesn’t have to register with the District of Columbia before conducting business, it does need to apply for a Basic Business License (BBL) and Certificate of Occupancy (COO). The Office of the Zoning Administrator administers the COO, and the Department of Consumer and Regulatory Affairs (DCRA) issues your BBL. You can register online with your Access DC account on DCRA’s My DC Business Center. You’ll also need to check for other licenses if your business will be offering a licensed activity, like food services, rental housing, or professional services. In addition, don’t forget to apply for any federal government licenses.

If searching for all the licenses, permits, and clearances your business might need sounds time-consuming and complicated, we can help. We’ve worked with our partners at Avalara to save you time with a comprehensive Business License Report that identifies your licensing and permitting needs at every level of government. 

Step 6: Get an Employer Identification Number (EIN)

When you have employees or need to pay federal taxes, you need an Employer Identification Number (EIN). The IRS issues EINs to new businesses to use when filing federal taxes or reporting federal wage withholding. While applying for an EIN is one more task on your to-do list, we can complete it for you with our Employer ID Number Service. 

Step 7: Get District of Columbia Tax Identification Numbers 

In addition to applying for a federal EIN, you’ll need to register your general partnership with the District’s Office of Tax and Revenue (OTR) to pay state taxes. While a general partnership won’t owe taxes at the entity level (profits and losses are passed on to the partners to pay income taxes on their returns), your business will likely owe taxes for the type of activity it engages in. For example, a retail business needs to apply for a sales and use tax. You’ll need to register for state wage withholding if you have employees. You can register for all your state taxes in one place online with MyTax DC. 

Forming a Business Partnership in the District of Columbia: Next Steps

Once you’ve obtained your business EIN and the required licenses, you can apply for a business bank account. Using a business bank account will separate your business income from your personal finances. Next, apply for the level of insurance that your business needs. Finally, don’t forget to check in with your financial advisor to make sure your business finances are in order and you’re ready to start conducting business.

How We Can Help

We’re a team of business experts, and together we can guide you through the formation process and help you stay in compliance. By this point, you likely have a long to-do list before you feel comfortable starting your new business. That’s where we come in. With our business services, like our Worry-Free Compliance Service, we’ll remind you of important deadlines and keep your documents in one place. We’re here to help you through the tough times and the easy (hint—the partnership is easy!).

If you’re looking for more robust liability protection, we can help you complete the registration process for a District of Columbia LLC  or corporation today.

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.