How to Move an LLC to District of Columbia

An out-of-state LLC can change its jurisdiction to District of Columbia through statutory domestication. District of Columbia domestication is a legal transaction that changes an LLC’s jurisdiction of formation, the jurisdiction whose law primarily governs the company. An out-of-state LLC, also called a foreign LLC, that domesticates to District of Columbia becomes a District of Columbia LLC governed by the District of Columbia Uniform Limited Liability Company Act of 2010 (D.C. Code §§ 29-801.01 through 29-810.01).

The LLC is otherwise the same business entity before and after the domestication process. Whether the domestication can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Some states use the name conversion for the legal procedure that changes an LLC’s jurisdiction of formation, also called its domicile. In many of those states, a business can complete a conversion to change its domicile or to change its entity type. District of Columbia has two distinct procedures for LLCs.

A District of Columbia LLC domestication changes a company’s domicile only. A conversion changes a business from one entity form to another. For example, a District of Columbia corporation might convert to an LLC. This article deals with domestications that change an out-of-state LLC into a District of Columbia LLC.

Why Business Owners Move LLCs to District of Columbia

A District of Columbia LLC domestication may make sense if a business owner moves to the District or if the owners prefer to have District of Columbia law govern the company. An owner might transfer an LLC to District of Columbia for any of the following reasons:

• Owner convenience. A business owner who lives in the District may find that having the company governed by D.C. law is more convenient. A D.C. resident business owner may cut down on legal issues and have an easier time working with government offices if the business is a District of Columbia LLC. An owner may also want an LLC to be governed by D.C. law if the company does a substantial amount of its business with the federal government.
• Networking and hiring advantages. When business owners need professional assistance, they must find someone who is licensed and knowledgeable about the right jurisdiction. A District resident is more likely to find local attorneys, accountants, and other professionals who are familiar with the District’s business laws and regulations. Domesticating an out-of-state LLC may also enable in-person meetings with professionals and offer networking advantages for the owner.
• Simplified annual reporting. An out-of-state LLC that domesticates into District of Columbia may reduce its annual reporting burden. When a business is formed in one jurisdiction and mostly operates in another, it usually must file annual reports in both. An LLC that transfers to the District might not have to file in its former state if it will not do further business there. The District also requires only biennial reporting (every two years) for LLCs.
• Legal benefits. A domestication into District of Columbia can be a good business decision if D.C. law has advantages for the company compared to the original state. Although District of Columbia is not considered a business-friendly jurisdiction, a company may still benefit if D.C. law is, for example, a better fit for the members’ preferred operating agreement terms.
• Lower overall tax burden. Washington, D.C. is typically considered a high-tax jurisdiction and ranks among the bottom ten for business taxes. However, a transfer into the District may nonetheless save an LLC on taxes if the original state no longer taxes the business. A state must have a sufficient connection, or nexus, with a business to have the power to tax it. If the original state can no longer tax the company after the domestication, the business may see overall tax savings.

District of Columbia LLC Domestication Requirements

District of Columbia LLC domestication is not available for every out-of-state LLC. An LLC domesticating to District of Columbia must comply with both District of Columbia law and the current state’s law. District of Columbia law controls the process and documents filed in the District and determines the domestication’s legal effects.

The current state’s law governs whether the LLC can domesticate to District of Columbia, the content of the written plan of domestication if required, the standard under which the LLC’s members or managers must approve the plan of domestication, and the effective date for the domestication.

Eligibility for District of Columbia LLC Domestication

An LLC considering domestication to District of Columbia must confirm that it is eligible for the process. The principal requirement is that the current state must authorize LLC domestications. Not all states do. The current state may call the process domestication, conversion, or another name. The important part is that the state must have a statutory procedure that lets an LLC organized in that state change its domicile to a new jurisdiction.

Business owners must also review the LLC’s articles of organization and operating agreement to ensure there are no provisions that prevent domestication to a new jurisdiction. If any restrictions are present, the LLC may need to formally amend the documents to allow the procedure.

An out-of-state LLC must also confirm that District of Columbia lets LLCs engage in the company’s field of business. An out-of-state LLC considering a D.C. domestication should also confirm that it can satisfy all D.C. laws and regulations that govern the company’s business.

For example, an LLC formed to provide professional services, called a professional limited liability company or PLLC, must comply with the District’s rules governing the specific profession. A professional service under D.C. law is a personal service that only a licensed person can provide in the District. Professional services include law, accounting, architecture, and health professions.

Required Documents for District of Columbia LLC Domestication

The District of Columbia LLC domestication process involves preparing and adopting several domestication documents that must satisfy both jurisdictions’ requirements. The domestication documents memorialize the terms of the domestication and control the company when the domestication takes effect.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both District of Columbia law and the law of the state that the LLC is moving from.
• District of Columbia Articles of Domestication. The District of Columbia Articles of Domestication with all information and any related documents needed for filing with the District of Columbia Department of Licensing and Consumer Protection.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.
• District of Columbia Articles of Organization. The District of Columbia Articles of Organization for filing with the District of Columbia Department of Licensing and Consumer Protection.
• District of Columbia Operating Agreement. A jurisdiction-specific Operating Agreement to properly structure the LLC as a District of Columbia LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the District of Columbia organizational documents as the LLC’s governing documents.

The Articles of Domestication and Articles of Organization accept electronic signatures under District of Columbia law. The District of Columbia Department of Licensing and Consumer Protection allows e-filing for electronically signed documents.

The LLC also completes several administrative tasks to implement the domestication.

• conducting a preliminary name search with the District of Columbia Department of Licensing and Consumer Protection to determine whether the LLC’s name is available in District of Columbia (if the name is unavailable
• a slight name change may be required); obtaining a Certificate of Good Standing from the state agencies in the prior state; obtaining signatures on the Articles of Domestication and Articles of Organization; filing both documents with the District of Columbia Department of Licensing and Consumer Protection;
• filing domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from

Cost of Moving an LLC to District of Columbia

The cost of moving an LLC to District of Columbia depends on the scope of work involved. The documents and filings described above require professional preparation to comply with both jurisdictions’ requirements, and coordinating submissions with two separate government filing offices adds further complexity. Understanding the full domestication process is covered in detail in our guide to LLC domestication.

In addition to professional service costs, the District of Columbia Department of Licensing and Consumer Protection charges a filing fee of $220.00 for an LLC domestication. The fees paid to District of Columbia are in addition to any filing fees that must be paid to the LLC’s original state. Most states charge a separate fee for LLCs domesticating out of state.

An out-of-state LLC that domesticates to District of Columbia will also incur labor costs and, if applicable, registered agent fees. Labor costs are the amounts charged by the service provider the LLC retains to manage the District of Columbia domestication.

Service providers may charge a flat fee or charge by the hour, with fee amounts varying by provider. Work that goes into a domestication includes obtaining and organizing information, drafting the domestication documents, communicating with the business owners and the District of Columbia Department of Licensing and Consumer Protection, and filing domestication documents with government filing offices.

A domesticating LLC will incur registered agent fees if it elects to hire a commercial registered agent. An LLC formed in District of Columbia must appoint a registered agent authorized to receive service of process, notices, and demands for the company. An LLC’s articles of organization must list the registered agent’s name and address, which must be a street address in District of Columbia.

Although an LLC member or manager can be its agent, LLCs often choose to hire a commercial registered agent, an individual or entity in the business of serving as registered agent for business entities. A commercial registered agent can be helpful if an LLC lacks a D.C. address, or if the LLC wants a consistent, organized contact for receiving important communications.

Processing Time for District of Columbia LLC Domestication Filings

A District of Columbia LLC domestication proceeds in several steps. The length of the process depends on how long each step takes.

Each step depends on the responsible person’s turnaround time: the business owners’ time to organize the necessary information, the service provider’s time to review the information and prepare the domestication documents, the owners’ time to approve and sign the draft documents, the service provider’s time to file the final domestication documents with government filing offices, and the filing offices’ time to accept and process the filed documents.

The District’s Business and Professional Licensing Administration typically processes online and mail filings within 15 business days, starting from when the filer’s payment clears the bank. Faster processing is possible for walk-in filers, with an additional expedited processing fee of $50.00 for 3-day service or $100.00 for same-day processing. The domestication becomes effective when the certificate of organization takes effect, after the Articles of Domestication are delivered to the District of Columbia Department of Licensing and Consumer Protection for filing.

Moving an LLC Out of District of Columbia

District of Columbia permits outbound LLC domestication under D.C. Code § 29-809.06(b). A District of Columbia LLC can domesticate to another jurisdiction’s LLC law, provided that the destination jurisdiction also authorizes the procedure.

District of Columbia Outbound Domestication Requirements

A District of Columbia LLC that domesticates to another jurisdiction must file the Articles of Domestication (or the equivalent document under the destination jurisdiction’s law) with the District of Columbia Department of Licensing and Consumer Protection.

The outbound filing must include a Plan of Domestication approved by the LLC’s members or managers. The destination jurisdiction will require its own formation and domestication documents. District of Columbia law requires a Statement Surrendering the Company’s Certificate of Organization to complete the jurisdiction’s side of the transaction.

Filing Fees for Moving an LLC from District of Columbia

The District of Columbia Department of Licensing and Consumer Protection charges a filing fee of $220.00 for an outbound domestication. The destination jurisdiction will charge separate filing fees for its formation and domestication documents.

Legal Effects and Benefits of District of Columbia LLC Domestication

A District of Columbia LLC domestication officially transfers an out-of-state LLC into the District without disrupting the business’s existence or operations. District of Columbia domestication is a statutory procedure that changes the jurisdiction that primarily governs an LLC.

An out-of-state LLC that domesticates into the District changes its jurisdiction of formation, or domicile, to District of Columbia. The LLC is still the same company, but after completing the domestication, it is a D.C. LLC governed by the District’s Uniform Limited Liability Company Act of 2010.

There are multiple strategies for moving an existing LLC to a new jurisdiction. The District’s LLC domestication process, when it can be used, is the most streamlined approach for most companies. The domestication process’s advantages include:

• Consistent identity. The domesticated District of Columbia LLC is for all purposes the same company that existed in the other jurisdiction before the domestication. It continues the same tax-reporting history and can still use the same Employer Identification Number.
• Governing law. After domestication, the LLC is a District of Columbia LLC governed by the District of Columbia Uniform Limited Liability Company Act of 2010. District of Columbia courts have jurisdiction over the domesticated company. The LLC’s District of Columbia Articles of Organization and Operating Agreement are effective and are binding on the company and its members.
• Day-to-day operations continue as normal. The company’s day-to-day business is not interrupted. The company keeps operating as normal during and after the domestication unless the members decide differently. Business offices can stay open, and the company can continue earning income.
• Contracts remain effective. The LLC’s business contracts are still valid. An LLC domestication into District of Columbia does not interrupt the LLC’s existing business agreements. The company continues contractual arrangements and still has all the same rights, duties, and obligations after the domestication. Employment relationships are also unaffected, so there is no break in the business’s employment of its employees.
• Assets and liabilities stay the same. The LLC’s business contracts are still valid and enforceable after domestication. The domesticated LLC still owns all the same real estate, personal property, and other assets that the out-of-state LLC owned. There is no need to sign deeds in favor of the D.C. company or to create asset-assignment instruments transferring other property. The LLC also owes all the same debts and taxes that it owed before domestication. Any debts, taxes, liabilities, or other legal or contractual obligations that the out-of-state LLC had before the domestication are now the D.C. LLC’s debts, liabilities, and obligations.
• Legal cases carry on. Legal cases and proceedings involving the out-of-state LLC move forward as though the domestication into District of Columbia did not occur. If the domestication results in a name change, the company’s new name in the District can be substituted for the prior name.
• Ownership interests. The terms and conditions of the domestication, as described in the plan of domestication, take effect when the domestication is complete. The terms include a description of how interests in the out-of-state LLC will be treated. LLCs typically convert ownership interests from the original state into interests in the domesticated LLC, with members keeping the same voting rights and profit-and-loss distributions. Members may also agree to exchange ownership interests for cash, property, or other consideration.
• No dissolution. A domestication into District of Columbia does not require dissolution of the out-of-state LLC in the current state. The District of Columbia domestication process does not require dissolution of the out-of-state LLC in the original state, and the out-of-state LLC is not treated as though it was dissolved. The company simply continues its existence as a District of Columbia LLC, avoiding the burdensome and intensive process for dissolving and winding up a company.

District of Columbia LLC Laws That Apply After the Move

The District of Columbia Uniform Limited Liability Company Act of 2010 (D.C. Code §§ 29-801.01 through 29-810.01) imposes ongoing requirements on all domestic LLCs, including those formed through domestication from another state. An LLC that domesticates to District of Columbia becomes subject to these obligations immediately upon effectiveness of the domestication.

District of Columbia Biennial Report and Compliance Requirements

District of Columbia requires domestic LLCs to file a Biennial Report with the District of Columbia Department of Licensing and Consumer Protection. The filing must be submitted every two years by April 1 of the year in which the report is due. The filing fee is $300.00.

This reporting requirement is one advantage of domesticating to District of Columbia, as it eliminates the burden of annual compliance filings common in other jurisdictions. An LLC that domesticates to District of Columbia and no longer has to file in the original state will avoid the time and expense of more frequent annual filings.

District of Columbia LLC Operating Agreement Requirements

District of Columbia refers to an LLC’s internal governance document as an “Operating Agreement” under D.C. Code § 29-801.02(10). The Operating Agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. The Operating Agreement is not filed with the jurisdiction; it is maintained by the LLC as a private document.

District of Columbia Registered Agent Requirements

District of Columbia requires LLCs to appoint a registered agent authorized to accept service of process, notices, and demands for the company. An LLC’s articles of organization must list the registered agent’s name and address, which must be a street address in District of Columbia.

Although an LLC member or manager can be its agent, LLCs often choose to hire a commercial registered agent, an individual or entity in the business of serving as registered agent for business entities. A commercial registered agent can be helpful if an LLC lacks a D.C. address or if the LLC wants a consistent, organized contact for receiving important communications.

District of Columbia LLC Member and Manager Protections

District of Columbia law provides protections for members and managers of domesticated LLCs. Members have charging order protections under D.C. Code § 29-805.03, and the statute makes charging orders the exclusive remedy for judgment creditors seeking to satisfy a judgment out of a member’s membership interest. Managers and members have fiduciary duties of care and loyalty under D.C. Code § 29-804.09, but the operating agreement can modify or eliminate these duties to some extent.

Alternatives to District of Columbia LLC Domestication

When domestication is not available because the other jurisdiction’s law does not authorize it, a merger-based reorganization achieves the same result. The reorganization involves forming a new District of Columbia LLC and merging the out-of-state LLC into it, with the District of Columbia LLC as the surviving entity.

The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law. For a detailed explanation of how the reorganization process works and how it compares to domestication, see our guide to LLC reorganization.

For a state-by-state comparison of LLC domestication and conversion laws across all jurisdictions, see our guide to LLC domestication and conversion by state.