Determine the Business Type

Now that you've decided to start a business, you need to decide what type of business. Businesses generally fall into three categories:

1. Service: Will the company provide a service? Examples include lawn care companies, law and accounting firms, and hair salons.
2. Retail (Merchandising): Will the company sell products in small quantities directly to the consumer? Examples include grocery, hardware, and stationery stores.
3. Manufacturing: Will the company create a product from raw materials or pre-fabricated components? Examples include car and computer manufacturers, and construction firms.

Determine the Ownership Structure

Careful consideration should be given to a company’s legal structure. Some questions to ask:

• How many owners will there be?
• How important is it to limit personal liability for debts or claims against the business? In general, incorporating is the best means of limiting liability.
• Which business structure will result in the lowest taxes? There is no universal answer to this question. Tax-wise, however, some structures are better than others.

Develop a Business Plan

A good business plan is essential to formulate your business, obtain financing, attract and retain key employees, identify and attract strategic alliance partners, and to speed your company's growth. These resources will help you develop your plan:

• The Small Business Administration provides a comprehensive business plan outline.
• DC Small Business Development Center also offers a business plan outline..
• University of Colorado Center for Entrepreneurial Excellence offers business plan templates.
• American Express provides a business plan primer.
• New England Business Services (NEBS) will guide you through a free interactive online business planning tool.
• Inc. Magazine also has interactive tools to build a business plan.

This section helps you map out your business financially and find financing. It offers advice on how to put your financial house in order, assess your finance needs, and approach lenders. Find out what lenders are looking for, compare financing options, and get advice on presenting your business plan.

• Determine Your Financial Needs
  • Accurately gauging how much capital you need is crucial to success. Your first step toward a financially viable business begins with your current financial state of affairs. To determine where you are and what you have available to you, you must organize your finances, assess your current resources, obtain a credit report, and complete your financials.
• Review Your Business Plan
  • The business plan is a crucial part of the loan package you will eventually present to investors or lenders. So now that you have your financials in order, it's time to revisit your business plan to ensure that the numbers:
    • Support your goals and are realistic
    • Show how you will exponentially grow your company
    • Support your plan to minimize the risks
    • Demonstrate clearly how you plan to pay your investors back, with a profit

In addition to scrutinizing your financial process, investors will review your plan to determine if key management has effectively grown and sold businesses, dealt with investors, or taken companies public in the past. Learn more about how to write an effective business plan. After revisiting your business plan, you may find that your current resources don't meet your funding needs, and it's time to look for financing.
In general, however, there are four types of bank loans.

Loan Type Description Line of Credit The bank gives you a range of credit that you use when you need it Receivables Financing The bank finances against your revenue Inventory Financing The bank lends against your inventory, which is also called collateral Asset-Based Financing The bank allows you to borrow against your assets, ranging from receivables and inventory to buildings and other real estate





• Find Additional Financing
  • You may discover there's a gap between what you have available and what you need to start or grow your business. A traditional bank loan product like a start-up or term loan can fill this gap.

    Before visiting local lending institutions , you should have a general idea of your financing needs and read more about available funding options.

    
    
    

• Learn About the Loan Process

  • All investors want to see a carefully developed Loan Package. It's, therefore, critical that you spend quality time completing the documentation. Begin by expanding the information found in your business plan to address the need of the lending institution. As you put the paperwork together, keep in mind the bank's goal: to make sure you will eventually pay off your loan.

    And finally, before you apply for a bank loan you should understand what bankers are looking for and what you'll be judged on.

    1. What Lenders Look For
    2. Loan Package Components
    3. The Process
    4. Critical Questions
    5. Time Factors
    6. If You Are Rejected

Obtain Federal Tax Identification Number

An employer identification number (EIN), also known as a taxpayer identification number (TIN), is assigned to sole proprietors, corporations, partnerships, estates, trusts, and other entities for tax filing and reporting purposes. You can obtain your EIN online, by mail, or phone.

Online

• Submit a application online

By Mail or Phone

• Complete form Form SS-4*.
• Once the form is completed you can obtain your EIN by calling (866) 816-2065, or mail the form to the IRS Attn: Entity Control, Philadelphia, PA 19255.
• For more federal tax information, visit the IRS FAQ page.

* In order to read the document listed above, a PDF reader is required for viewing.
Please download a PDF Reader .

Completing the FR-500 Combined Business Tax Registration satisfies the initial registration requirement for most DC taxes. To apply, visit the Business Taxpayer Service Center .

You will need the following information to complete the online tax registration form:

• Your Federal Employer Identification Number and/or Social Security Number
• Your legal form of business (e.g. partnership, corporation, sole proprietor)
• Your business address
• The names, titles, home address, and Social Security number of the proprietor, partners, or principal Officers
• The former Entity Information if previously registered with the District
• The addresses for all locations where you will collect sales tax in the District of Columbia

During the FR-500 registration, you will be able to indicate which of the following tax returns you will file with the District of Columbia:

• Corporation Franchise Tax Return (Form D-20)
• Unincorporated Business Franchise Tax Return (Form D-30)
• Employer Withholding Tax Return (Form FR-900 series)
• Sales and Use Tax Return (Form FR-800 series)
• Personal Property Tax Return (Form FP-31)
• Street Vendor Payment
• Gross Receipts Tax
• Unemployment Compensation Tax (Registered by the DC Department of Employment Services)

Additional DC taxes may apply. For more information, call the Office of Tax and Revenue at (202) 727-4829. When filing the Combined Business Tax Registration online, you can also register to file and pay your taxes online through the District's eTaxpayer Service Center.

Make sure the location of your business is compliant with DC building codes and zoning regulations. Check zoning regulations by contacting the Office of Zoning at (202) 727-6311.

Obtain a Certificate of Occupancy

The District requires a business to obtain a Certificate of Occupancy or Home Occupation Permit showing that it meets the correct building and zoning codes for the intended use of its building. Print, fill out, and submit the application in person to the Building And Land Regulation Administration Permit Service Center, 941 North Capitol Street, NE, Suite 2100, Washington, DC 20002. For more information, call the DCRA Permit Service Center at (202) 442-9475.

A business may not need one, however, if it is leasing space in a building that already holds a Certificate of Occupancy. For instance, a law firm can operate under the umbrella of an office building's Certificate of Occupancy as long as the firm operates in a manner that conforms with office use.

Certain businesses need to obtain a separate certificate if the property owner's Certificate of Occupancy does not cover their business. It's important, therefore, to ask the owner, property manager, or agent about the Certificate of Occupancy when entering into a lease agreement.

• Certificate of Occupancy
• Home Occupation Permit
• Information for Home Occupation Permit Applicants
• Expedited Application for a Home Occupation Permit

1. Certificate of Occupancy

The purpose of the Certificate of Occupancy (C of O) is to ensure that the use of a building, structure or land in the District of Columbia is compatible with the general intent of the Zoning Regulations and the provisions of the DC Building Codes. Consequently, no person can use a structure or land in the District of Columbia for any purpose other than a single-family dwelling until a Certificate of Occupancy has been issued for that structure. The fee is based on square-footage.

A new Certificate of Occupancy is required when:

• A property has a change of ownership
• A property has a change in occupancy load
• A property has a change in use

A Certificate of Occupancy is not required when:

• A business is conducted in a commercial building that already has a general C of O
• It is for a separate apartment in an apartment building for which a general C of O has been issued

All Certificates of Occupancy must be prominently posted and visible to those entering the premises, with the exception of churches.

If a use is proposed that does not meet the zoning requirements for a particular location, an application for a special exception or variance may be filed with the Board of Zoning Adjustment. Information regarding the zoning and acceptable uses for any location in the District of Columbia is available at www.dcoz.dc.gov, or by calling the Office of Zoning at (202) 727-6311.

Certificate of Occupancy Instructions and Application*
Certificate of Occupancy Authorization Form
Certificate of Occupancy Regulations *

2. Home Occupation Permit

The purpose of the Home Occupation Permit (HOP) is to allow an individual to conduct certain occupations in his or her principal residence, while at the same time protecting residential neighborhoods from possible adverse effects of such occupations. Title 11, Section 203 (Home Occupation), of the District of Columbia Municipal Regulations states that no person shall conduct a home occupation without a Home Occupation Permit. The one-time fee for the HOP is $50.

A home occupation is a business, profession or other economic activity that is conducted full- or part-time in the principal residence of the person conducting the business. Examples of allowable uses as home occupations are general office use, tutoring of no more than five students at one time, sewing, fine arts activities, computer programming, cosmetologists and hair care providers, physicians and other licensed health care professionals.

Following are some basic conditions for a home occupation permit:

• No more than the larger of 25% of the floor area of the dwelling, or 250 square feet, can be used in the home occupation.
• No more than one person who is not a resident of the dwelling can be employed in the home occupation.
• No structural alterations to the interior of the dwelling are permitted for the occupation, if they would make it difficult to return the dwelling to exclusive residential use.
• No more than two vehicles can be used in the practice of the home occupation, and no more than 8 trips to the premises daily by visitors, customers and delivery persons are permitted. No more than 8 clients can be on the premises in any one-hour period. No parking or storage of commercial vehicles is permitted.
• One exterior sign, unlit and flush-mounted, of no more than 144 sq. in. is permitted.
• Any activity involving commercial food preparation is not considered a home occupation.

A Bed and Breakfast facility is considered a home occupation, provided that the use is in a single-family building, breakfast is the only meal served, and, with some conditions, that there are no more than two sleeping rooms. Additional requirements apply if the dwelling is in a historic district. Generally, an application for a Home Occupation Permit is carefully reviewed by staff in the Zoning Division to determine whether the type of business activity will have an adverse impact on the surrounding neighborhood, and if physical or structural changes and additions are required. For example, a physician's office may require off-street parking, which would require a separate permit.

Instructions, Application, and Regulations for Home Occupation Permit
Authorization for Use of Rental Property

3. Information for Home Occupation Permit Applicants

Read the Zoning Regulations regarding Home Occupations before completing the application for the Home Occupation Permit (HOP). Incomplete applications will delay the approval process.

Be sure that necessary attachments to the application (i.e. license, incorporation document, letter of good standing etc.) are submitted at the time of application.

There are two fees for the HOP. Submitted with the HOP application; the Filing Fee payment of $25.00 is required. Your application is reviewed by a Permit official, and if approved, the payment of an additional $25.00 for the Issuance Fee is required. These two fees are a one-time payment, perpetually valid unless there is change in address or occupation.

All fees for HOPs are made payable to the DC Treasurer at the Cashiers Office on the first floor of 941 North Capitol Street, NE.

All applications are reviewed expeditiously. Please allow 3 to 5 working days of review time before calling to inquire about the status of your application.

Applicants can call (202) 442-9464 between the hours of 8:30 am and 4:30 pm, AFTER THE REVIEW PERIOD NOTED ABOVE, to ascertain the status of your pending application.

If your application is denied, an explanatory letter from the Building and Land Regulation Administration shall notify you of the reason(s).

If you have any questions after reading the Regulations attached, please see a Zoning Technician at the Permit Service Center, Suite 2300 on the 2nd Floor of 941 North Capitol Street, NE for clarifications or interpretations.

The validated Home Occupation Permit (given to applicant after payment of the Issuance Fee) is required before filing for Tax ID numbers and applicable business license(s). Please take the issued HOP to the Business License Office on the first floor of 941 North Capitol Street, NE for all License services.

Filed Home Occupation Permit Applications are valid for 90 days from the date of application. Unpaid Approved application not obtained within the 90 days time window, will be CANCELED without notice to the applicant.

Recognizing that many home-based businesses are only engaged in "office type" work, the department has developed an Expedited Application for a Home Occupation Permit. This application can be used if the business owner can certify that the business complies with the following conditions:

1. The home occupation is located in my primary residence.
2. No more than the larger of 25% of the floor area of the home or 250 sq. ft. will be used for the home occupation. 60% of floor area may be allowed for a home artist studio.
3. The operation of my business does not produce a level of noise that exceeds the level that is normally associated with a residential area or the District's noise regulations.
4. No more than one person who is not a resident of the home will be engaged or employed in my home.
5. No structural alterations are required or planned in order to conduct my business from my home that would make it difficult to return the home to residential use.
6. The business does not create visual or audible electrical interference in television or radio receivers outside of the home, nor does it produce noxious odors, vibrations, glare or fumes outside of the home.
7. No vehicular trips by customers are made to my home. Operation of my business does not require the parking and storage of commercial vehicles.
8. No direct sale of products will be made from my home except by telephone.
9. I understand that only one sign is permitted which may not exceed one sq. ft., must be flush-mounted and may not be illuminated.
10. My profession is not licensed by the Department of Health.
11. No services for children such as tutoring or childcare are provided in my home.

Instructions and Expedited Application for Home Occupation Permit *

Register the Business Trade Name(s)

A trade or fictitious name is any name used in business that does not include the full legal name of all the owners of the business. Your trade name is different from your corporate name; your business may have only one corporate name but as many trade names as you desire.

The legislation that created the Basic Business License Program also established a trade name registration program. The program keeps a public record of all the owners of a business. Businesses with registered trade names may undertake any legal action under the registered trade name.

For more information about trade name registration, call (202) 442-4311.

You can register your trade name at the same time you apply for your business license or after obtaining your business license.

To benefit the business community, the District allows you to register and use a business name (trade name) different from your true name, if you are an individual, or from your corporation, partnership, or company name. You do not need to register the name used for your corporation, partnership, or LLC as your trade name; it is considered as your true name. The benefits of registering your business name include:

• The use of fictitious or shortened business names in conducting business, including transacting business with vendors and financial institutions (For example: use of fictitious names such as "Scarves by Sandra," or use of a shortened version of a corporate name such as "Fullerton's" for "The Fullerton Corporation")
• Official records of all owners associated to a business name
• The availability of taking legal action under a business name

The business name registration fee, should you elect to have a business name, is $50.
To review the terms and conditions of the business name regulation, click here .

Basic Business License

The Basic Business License (BBL) Program streamlines District of Columbia licensing procedures for individuals, organizations, and associations, including nonprofits. The BBL groups licenses by the type of business activity and regulatory approvals required. These are referred to as "endorsement categories." A brief checklist on the BBL website helps entities determine whether they are required to apply.

For more information about the Basic Business License Program, call (202) 442-4311.