Starting an LLC with a co-founder in Washington, DC? Understanding your tax obligations is crucial for long-term success. This guide breaks down the key federal and District of Columbia taxes your co-founder LLC will face in 2026. If you're exploring this further, our guide on how to register an LLC in Colorado is a helpful next step. Lovie's AI-powered platform can help you navigate these complexities and ensure compliance every step of the way.
For tax purposes, a multi-member LLC like yours is generally treated as a partnership by default. This means profits and losses are passed through to each co-founder's individual tax returns. However, you can elect to be taxed as an S-Corp or C-Corp for potentially different tax implications. For a deeper dive, see our resource on EIN requirements for Colorado. In DC, your LLC will also be subject to the Unincorporated Business Franchise Tax unless you elect to be taxed as a corporation. Lovie can help you evaluate the best tax structure for your co-founder LLC.
Single-member LLCs pay self-employment tax (15.3%) plus income tax on all net profits, reported on Schedule C of the owner's personal tax return.
Deduct ordinary and necessary business expenses, such as rent, utilities, supplies, and marketing costs.
If you use a portion of your home exclusively and regularly for business, you may be able to deduct expenses related to that space. Deduct up to $5,000 in start-up costs and $5,000 in organizational costs in the first year. The remainder can be amortized over 180 months.
Pay estimated federal income tax to avoid penalties for underpayment. Use Form 1040-ES.
Pay estimated self-employment tax to cover Social Security and Medicare taxes. Pay estimated DC income tax if you expect to owe more than $100 in DC income tax.
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State-specific formation guides, cost breakdowns, compliance checklists, and expert comparisons — updated for 2026.