Washington DC LLC Operating Agreement
The District of Columbia LLC Operating Agreement is the core document that is referred to when issues concerning a District of Columbia limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your District of Columbia LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the District of Columbia.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the District of Columbia will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your District of Columbia Limited Liability Company
LLC Filing Office
of Consumer and Regulatory Affairs
Business regulation Administration
941 North Capital Street, N.E.
Washington, DC 20002
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Entity or Franchise Level Tax
The District of Columbia imposes an unincorporated business franchise tax on partnerships and LLCs that are taxable as partnerships for federal income tax purposes. Partnerships that engage in trade or business in the District or receive income from sources within the District have gross income of more than $12,000 are subject to the tax. The minimum tax is $100.
In addition, the District of Columbia imposes an annual “ballpark fee” on partnerships and LLCs, regardless of their federal entity classification. The fee is triggered if the taxpayer has District of Columbia gross receipts of $5 million or greater in its most recent calendar or fiscal year ending before June 15. The fee is graduated according to the fee payor’s District of Columbia gross receipts, ranging from $5,000, for a fee payor with $5 million of gross receipts, to a maximum of $16,500, for a fee payor with gross receipts in excess of $16 million.
State LLC Act
The DC LLC Act is contained in Title 29, Chapter 10 of the DC Code
Important Statutory Rules
An LLC is managed by its members unless the Articles of Organization states that the LLC is to be managed by one or more managers.
Admission of Members
Unless the Operating Agreement states otherwise, new membership must be issued with the unanimous consent of all members.
Amending the Operating Agreement
Unless otherwise provided in the Operating Agreement, amendments to the Operating Agreement must be approved by members who own at least a majority of the interests in the profits of the LLC.
Dissolution of the LLC
Voluntary dissolution of the LLC must be approved by unanimous consent of voting members.
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