This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses. Information from the Department of Consumer and Regulatory Affairs (DCRA), the D.C. Office of Tax and Revenue and other city government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in Washington, D.C. are always changing. It is important that you call or visit city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
Sole proprietors and general partners who want a business name that does not include the owner(s) full legal names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) need to find out whether the name they want to use is available in the District of Columbia. It is important to remember that the name must be different from any other name already registered with the District.
Start with a business name search to avoid legal problems and customer confusion through the Department of Consumer and Regulatory Affairs (DCRA) online business portal. The Trade Name registration form is found here.
Filing a Trade Name or DBA (“doing business as” name) does not guarantee a business sole rights to the use of that name. Registered businesses are expected to legally defend their trade names.
Business License Registration
All residential cleaning services, including sole proprietors and general partnerships in Washington, D.C. must obtain a Basic Business License (BBL). If you plan to run your business from your home, D.C. also requires a Home Occupation Permit.
In the District of Columbia, a general partnership is created when two or more owners form an oral or written agreement to start a business together. General partners are not required to file any documents with the Department of Consumer and Regulatory Affairs (DCRA). A written partnership agreement drawn up by a lawyer is important for both or all partners. Partnership agreements do not have to be filed with the Department of Consumer and Regulatory Affairs (DCRA).
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register a new sole proprietor or partnership business for local D.C. business tax. Follow the instructions for the form FR-500 New Business Registration.
Residential house cleaning services are taxable in D.C.. Cleaning services must collect and send sales taxes to the Office of Tax and Revenue.
Sole proprietors and general partners who own cleaning businesses in the District of Columbia are exempt from the District’s unincorporated franchise tax in these cases:
• if the business has gross income of $12,000 or less, the owner(s) is not required to file a return or pay the $250 minimum franchise tax.
• if more than 80% of gross income is derived from personal services performed by the owner(s).
Sole proprietors and general partners pay tax on business income to the District of Columbia through their personal state tax return. Sole proprietors and general partners are responsible for paying estimated self-employment income taxes in D.C. (on Form D-40ES) similar to the way self employment taxes are paid to the federal government. Get more information about estimated tax requirements by calling the D.C. Office of Tax and Revenue Customer Service at (202) 727-4829.
District of Columbia general partnerships that file a Federal partnership information Form 1065, may need to file the District income tax Form D-65. Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.