Want to know how to start an LLC in Ohio? In Ohio, an LLC is a cost-effective type of corporate entity with specific obligations, such as registering the firm name with the Ohio Secretary of State. Because there are no compliance requirements or fees in Ohio, the process is simpler than in many other states. Basic information, such as a statement of purpose, must be included.
There are various legal requirements to follow when launching a small business, such as deciding which sort of corporate entity is ideal for your organization. If you are looking for how to set up LLC in Ohio, you need to be aware of the state’s rules and regulations. A limited liability company (LLC) in Ohio is a corporate structure that protects its owners from being held personally liable for the debts of the firm. To get more information on how to form an LLC in any state, you can read our complete guide on How To Set Up An LLC.
You must choose a business name, designate a registered agent, and file Articles of Organization for a Domestic Limited Liability Company with the Ohio Secretary of State when forming an LLC in Ohio. The idea of starting a business in Ohio is very simple and offers important benefits and helps you to get your business started and well on its way in no time. Let’s get started on the steps to launching a new business right now!
Before we start, here are the top picks for LLC formation services in Ohio:
Why Should You Start An LLC In Ohio?
- LLCs have the option of being taxed as a corporation or a pass-through entity
- In Ohio, LLCs are not required to submit a financial statement or pay a fee
- Personal liability for debts of the business and lawsuits is limited for members
- C-corporations are subject to double taxation, whereas LLCs avoid
- In Ohio, you can take advantage of several government loan programs
Ohio is a wonderful place for startups since it offers additional security for your company and protects your personal assets in the event that the firm is issued by creditors. Many business owners in Ohio who are starting an LLC are concerned about the paperwork and filing requirements. Using an online formation service, however, makes this procedure much easier.
LLCs are a popular choice among new and small business owners. Personal liability protection from business debts and disputes is provided by LLCs, which are extremely simple to form and operate. An LLC may be a suitable option for your business if you want flexibility in terms of administration, management, and taxation.
Having an Ohio LLC comes with a lot of benefits some of them are as follows:
1. Limited Liability Protection
You will be able to fully enjoy limited liability protection if you register a new business in Ohio as an LLC. This means that instead of pursuing the LLC’s owner or investors, investors can sue the LLC.
2. Less Complex
An LLC protects your company from disputes and other claims. It means you can focus on expanding your business rather than worrying about what happens to your assets in certain circumstances.
3. Pass-Through Taxation
LLCs have fewer rules and regulations when it comes to regulation and taxation than other types of enterprises. You won’t be taxed twice as a C-corporation if you form an LLC. You can also choose whether you want to be taxed as a corporation or as a pass-through organization.
4. Flexible Ownership
LLCs also have fewer general responsibilities than corporations. For example, they don’t have to pay an additional fee or file a report in order to maintain operating as an LLC.
5. Loan Programs
If you start a limited liability corporation in Ohio, you can take advantage of several financial assistance programs, such as loan programs. The following are some of the most well-known government loans:
- Guaranteed Loans for Businesses and Industries (USDA)
- Direct Loan 166 (Development Services Agency)
- A 504 financing scheme is offered by Certified Development Company (SBA)
- Loan Guarantee (Basic 7(a)) (Small Business Administration)
- Grants for Rural Business Development and Opportunity (USDA)
- Grants for Community Connection (USDA)
- Program for Community Development (Ohio Development Services Agency)
6. Flexible Profit Distribution
An LLC has the advantage of being able to choose how profits are distributed. It is flexible to choose how the dividend is to be divided among the members. Also, Read Our Guide On What Is A DBA For An LLC?
Small and medium businesses, as well as new businesses, can benefit from a range of business incentive programs in Ohio. Let’s take a look at some of Ohio’s top options:
In addition, Ohio offers a number of other business incentive schemes for small and medium-sized businesses. Here are some of Ohio’s best programs:
- Ohio New Markets Tax Credit Program: The Ohio New Markets Tax Credit program offers tax benefits to firms that operate in low-income areas. For their projects, a startup firm in Ohio can also get below-market, adaptable, or non-traditional funding.
- Ohio Enterprise Zone Program (OEZ): Municipal and county governments are in charge of the Ohio Enterprise Zone Zone Program. If you form a new company in Ohio EZ, you can take advantage of the program’s direct and personal property tax deductions. You can also take advantage of tax breaks, particularly for non-retail initiatives, as well as corporate franchise tax breaks. There are two types of Enterprise Zones available in Ohio which are Distress Based (Full Authority Zones) and Non-Distress Based Enterprise Zones.
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Disadvantages Of Starting An LLC In Ohio
- Self-employment taxes are frequently higher for LLC owners than for corporate owners
- LLCs and corporations are liable to Ohio’s business activity tax, whereas sole proprietorships and partnerships are not.
There are certain drawbacks when you form an LLC in Ohio which are as follows:
- It depends on the sort of entity you create. For example, an LLC can be dissolved if one of its owners dies or if the company declares bankruptcy.
- The incorporation process may result in higher overall taxes.
Steps For How To Start An LLC In Ohio
Before a limited liability corporation (LLC) can operate in Ohio, it must be registered with the Ohio Secretary of State. The Ohio Secretary of State establishes the requirements for forming a limited liability company (LLC) and the fees that company owners must pay to operate in Ohio. You’ll be up and running as quickly as possible if you follow the simple steps outlined in this article on how to start an LLC company in Ohio.
1. Choose A Name For Your Ohio LLC
The first and most crucial step in forming an LLC in Ohio is deciding on a name. Make sure your name conforms with Ohio’s naming guidelines and is easily searchable by prospective consumers. When you submit your Articles of Organization, you must provide your company with a distinct name that is distinctive from any other registered name in Ohio. When determining whether a name is accessible, the Ohio Secretary of State follows its own set of regulations. Check out the Secretary of State’s Guide to Name Availability for further information.
The names must comply with Ohio’s naming guidelines. The following are major considerations to make:
- The letters Limited Liability Company, LLC, or L.L.C. must appear in your company name.
- Your company name must not be similar to that of another company in the state. To see if a specific business name is in use, go to the Secretary of State’s website and run a search. For more information check Ohio Name Availability
- A business name cannot include words that are used to identify a government agency (i.e., State Department, CIA, FBI, Treasury, etc.)
- Your business, corporation, limited liability partnership, limited partnership, or brand name must be distinct from any other Ohio limited liability company, corporation, limited liability partnership, limited partnership, or trade name.
- Additional documentation and licensure papers may be required for certain prohibited words such as bank, lawyer, attorney, credit union, and so on.
By submitting a Name Reservation (Form 534-B) with the Ohio Secretary of State, you can register a name for 180 days. The application can be submitted either online or via mail. The cost of filing is $39. For more information on registering your business names, you can check our guide on how to register a business name.
- Availability of URLs: You’ll probably need a webpage even if you don’t think you’ll need one. At the very least, by purchasing your domain name now, you are reserving the option of having one in the future. It’s important to check if the URL is available before choosing an LLC name.
- Name Reservation: You can reserve your LLC name for a specified cost if you aren’t prepared to incorporate it but are concerned that it will be taken by someone else. Names can be registered for up to 60 days in Ohio by paying a fee and completing the appropriate form to the state government.
2. Appoint A Registered Agent in Ohio
A registered agent is required for all LLCs. Your Ohio LLC’s registered agent is the individual or entity authorized to handle official papers and legal documentation. Even if you employ a registered agent service, the Secretary of State will always be the primary point of contact for the state and anyone who may seek legal action against your LLC. If you are looking for a professional registered agent service, you can read our guide on Best Registered Agent Service Providers
In Ohio, the Secretary of State automatically acquires your LLC’s registered and principal agent, from whom you will get your incorporation documents and other business-related documentation. When filing online, you can select a different registered agent, such as an Ohio or another Ohio LLC. Your LLC must specify an Ohio street address where it can receive documents, irrespective of who acts as the registered agent.
As a legal agent, some small-business owners appoint themselves or another LLC owner. However, if you’re not able to accept official letters, you could get in trouble with the Secretary of State and for this reason, many firms use a registered agent service. Moreover, you can hire a company to act as your registered agent which may save you money. For newly formed LLCs it is required to post notices of formation in local newspapers. These registered agent services might be provided by an online legal services company like Incfile.
A registered agent must meet the following criteria such as:
- The registered agent must be 18 years old and able to receive documents during business hours and be a resident of Ohio
- If the agent is a company, it must be permitted to do business in Ohio
- The registered agent must have a physical street address in Ohio
- During regular business hours, the representative must be on-site and ready to accept documents
- If the agent is a company, it must be permitted to do business in Ohio
- The statutory agent must be an individual living in Ohio.
3. Check If You Need A Ohio LLC Business License
In Ohio, a variety of businesses require a business operating license. The Ohio Secretary of State maintains a list of different industries’ licensing requirements. Your local government can also provide you with full license information for your company. The Ohio Department of Taxation requires a vendor’s license for selling tangible personal things or taxable services.
If you’re doing business under a different trade name than your LLC’s legal name, you’ll need to use Form 534A to incorporate your trade name or submit a fictitious business name. Trade names must be different from other legal entities on file with the Secretary of State, according to Ohio law. It is not necessary for fictitious business names to be distinctive from other Ohio company names.
4. File Your Ohio LLC Articles Of Organization
After you are decided on your business name and registered agent you must file articles of organization for your LLC with the Ohio Secretary of State. You can file it online, by mail, or in person. Your LLC’s articles of the organization establish it as a legally distinct entity. An Articles of Organization form (Form 533A) is necessary to start an LLC in Ohio.
In Ohio, an LLC is formed by filing Articles of Organization for a Limited Liability Company with the Secretary of State. It contains basic information about your LLC, such as the name of the company, the county in which it is located, the name and address of your registered agent, and the name and address of the filer. It is suggested to file online using business filing services for quick processing. We recommend you to use ZenBusiness to fill out the articles of organization and file everything on your behalf. The filing fee is only $49 (plus state fees).
You’ll generally need the following information to prepare your articles:
- Your company’s name
- The effective date of the LLC
- The LLC’s time period of existence
- The goal or objective of forming the LLC
- An Ohio address to which the LLC’s legal paperwork should be mailed by the Secretary of State.
- The name and signature of the operator who is filing out the articles
- The name, address, and signature of the LLC’s registered agent
- In the case of foreign LLCs, you need to specify the state and the date of the original filing
The filing fee for articles of incorporation in Ohio is $99. When you submit your articles, you can pay using the web portal.
5. Ohio LLC Processing Time
The state will prepare and file your articles of organization within three to seven business days after you submit them. You can choose expedited filing for an additional cost. The state will mail you a certified copy of your articles of incorporation after you have filed them. This stamped copy should be kept alongside other vital company documents.
6. Prepare An Ohio LLC Operating Agreement
An operating agreement is a legal document that outlines how your limited liability corporation (LLC) will function. Although the state of Ohio doesn’t really require members of an LLC to create an operating agreement, it is still a necessary step in incorporating an LLC in Ohio. The operating agreement is a written document that spells out the LLC’s governance structure, as well as each member’s rights, responsibilities, and share of profits and losses.
Operating agreements are legally binding documents that set out the members’ rules, regulations, and obligations. All ZenBusiness formation packages include an operating agreement template, which makes things a lot easier for you. The operating agreement is not required to be filed, but it is an important part of your business. Getting a formal operating agreement easily accessible is beneficial for a variety of reasons, including resolving disputes about financial arrangements and other possible lawsuits. The agreement is strictly confidential and has not been registered with the Secretary of State.
Ohio LLC does not specifically require many things, but you should include the following topics below:
- The LLC’s objective, as well as the products or services it provides.
- All of the members’ addresses and phone numbers
- The worth of each member’s contributions to the company
- Each member’s share of the company’s ownership, profit and loss distribution, and voting rights.
- Admissions procedure for new members.
- If the LLC is controlled by a manager, this is the procedure for electing management.
- Existing members’ departures are handled using this procedure.
- The agenda for the meeting and the voting procedure.
- Procedures for dissolution
7. Get An EIN For Your Ohio LLC
Whenever you file your federal taxes, the IRS uses your social security number to identify you. For your LLC, an EIN is similar to a social security number. For federal tax purposes, they assist the IRS in identifying and tracking your business.
The Internal Revenue Service (IRS) assigns a nine-digit Employer Identification Number (EIN) to your LLC in order to identify it for tax purposes. You can get your EIN from the IRS by mail or online. This nine-digit number is required for any New York LLC with workers or even more than one member. For taxation purposes and financial documentation, such as filing taxes, recruiting new staff, and opening firm bank accounts, an EIN is essential. Without paying a filing cost, you can apply for an EIN on the IRS website.
When it’s time to do the following, your EIN will actually be useful:
- Open a bank account for your business
- File both federal and state income taxes
- For the need of hiring employees
8. Comply with Employer Obligations
Companies having employees in Ohio should be careful to meet these requirements to avoid paying fines. When incorporating an LLC in Ohio, businesses with employees must meet additional requirements:
- Within 20 days of being hired, employees must notify the Ohio New Hire Reporting Center. This is required by federal and state law.
- Ohio is one of only a few states that require you to buy workers’ liability insurance from the state rather than a private company.
- The Ohio Department of Job and Family Services requires employers to open an unemployment compensation tax account.
9. Comply With Other Tax and Regulatory Requirements
LLCs in Ohio are considered pass-through tax businesses. This means that the LLC does not have to pay income taxes. The profits and losses of the firm are passed through to each owner’s individual tax returns, and each owner is responsible to pay federal and state taxes on their part of the profits. Rather than being taxed as pass-through businesses, LLCs can choose to be paid as companies.
Ohio also has a corporate activity tax, which is determined by your company’s sales revenue. This tax has to be paid by both LLCs and corporations. Payroll taxes must be deducted from employees’ earnings and the employer portion of payroll taxes must be paid by LLCs with employees. Ohio LLCs, unlike most other states, are not required to submit a financial statement or pay a fee. Some examples include Ohio Commercial Activity Tax (CAT), State business taxes, State employer taxes, and Sales tax.
What Are The Next Steps After Forming The Ohio LLC?
When you’ve received confirmation that your Ohio LLC has been registered, your next priority should be to keep it in good standing over time. Here are some more suggestions about what to do and plan after forming an LLC in Ohio:
- Open a business bank account: For your new LLC, you’ll need to open a business bank account. A business bank account lets you keep personal and business costs separate, which is necessary to keep your LLC’s corporate veil intact. In the event that your LLC or business is sued, a corporate veil shields your financial property from lenders.
- Get a business credit card: A company credit card will help you separate personal and business costs while also creating a credit record for your firm.
- Hire a business accountant: An accountant for your business can help you save money on taxes and prevent penalties and fines. Accounting and payroll are made easier with the help of an attorney.
- Get Business Insurance For Ohio LLC: Risk management is aided by business insurance. General liability, professional liability, and workers’ compensation are the most popular types of business insurance.
Keep Your Company Compliant
- You need to research and get an Ohio license and permits
- File your Ohio biennial statement online with the Ohio Department of State at the end of the month in which the LLC was formed
- In the next step, you need to understand Ohio sales tax requirements and seller’s permits
- Understand the federal tax requirements to report income to the IRS each year using Form 1065 Partnership Return
Being a business entrepreneur you must make the right decisions to start a business. Starting an LLC in Ohio is a good option for small businesses as it provides personal liability protection and has the potential to save money on taxes. LLCs has separate legal structure protecting the business owner’s personal assets.
There are various legal requirements for operating a business in Ohio. In this guide, we have helped you with the rules and regulations which are required to be filled in the state. If you have the idea of forming an LLC in Ohio then you must go for an online business formation service such as Incfile as it provides all the necessary requirements on your behalf for just $49.
If you are considering whether or not to start an LLC in Ohio it is advisable to get help from our legal experts on deciding the right formation service for your business. Ready to start an LLC in Ohio? If you have questions, leave them in the comment section below!
Frequently Asked Questions (FAQs)
1. How much does it cost to form an LLC in Ohio?
The filing of the Articles of Organization with the Ohio Secretary of State costs $99. If you want to reserve your LLC name before submitting the Articles of Organization, you’ll have to pay $39 to complete a name reservation application.
2. How long does it take to get an LLC in Ohio?
If you file online, you can acquire an LLC in Ohio in as few as 2-3 business days (or 2-3 weeks if you file by mail). You can apply for expedited processing if you really need your Ohio LLC sooner.
3. Can I use a PO Box for my LLC in Ohio?
Your Registered Agent in Ohio can also operate as a general point of contact for accounting and tax notifications, payment reminders, and other papers. Almost all states prohibit the use of a PO Box address as a Registered Agent address, but Ohio allows it.
4. Do I need an operating agreement for my Ohio LLC?
Operating agreements are not required in Ohio, but they are strongly recommended. An operating agreement will help you secure your limited liability status, avoid financial and management errors, and ensure that you choose the rules that govern your company rather than relying on state law.
5. Where do I check if my Ohio LLC name is available?
Using the Secretary of State’s Business Name Search tool is the simplest way to do this. You can also contact the Secretary of State by phone or email to check your name availability.
6. Do I need a business license to sell online in Ohio?
A vendor’s license is required by Ohio law for anyone selling real or personal goods or taxable services in a retail setting. Vendor licenses come in a number of different forms. A normal county seller’s license or a transitory vendor’s license is held by the majority of businesses.
7. Do I need to register my business in Ohio?
Any domestic or foreign business entity interested in conducting business in Ohio under a name other than their own personal name must register with this office. To register their business, business entities must file the proper formation documents.
8. Do I need a Registered Agent for my LLC in Ohio?
When you finish your LLC’s Articles of Organization in Ohio, you’ll be asked to choose a registered agent. In Ohio, the Articles of Organization are the most essential document for forming a limited liability company.
9. How do I close an LLC in Ohio?
To dissolve your LLC in Ohio, you must send the Secretary of State a finished Certificate of Dissolution of LLC form by mail, in person, or online. Original signatures are not required by the Ohio Secretary of State.
10. How do I purchase a business name in Ohio?
When you incorporate your company entity (LLC or corporation) with the state of Ohio, you must register your business name. You must first decide on your business structure before conducting a business name search to verify that the name is available.
11. How much is an EIN in Ohio?
The cost of applying for an EIN for your Ohio LLC is completely free of cost. The IRS doesn’t charge anything for applying for an EIN.
12. Does an LLC expire in Ohio?
Once the limited liability company is expired it is unable to lawfully conduct business in Ohio until a relevant statutory agent is appointed and the entity is restored. Further filings with the Ohio Secretary of State may be required over the course of a limited liability company’s life.
13. What is EIN Number Ohio?
The Internal Revenue Service (IRS) uses an Employer Identification Number (EIN) to identify a corporation or entity in Ohio. Although the term includes the word “employer,” a corporation does not require its employees to acquire an EIN. EINs and Social Security Numbers (SSNs) are both nine-digit numbers, however, they are not identical.
14. How much does a small business license cost in Ohio?
A $25 registration fee is required to obtain an Ohio vendor licence. Other licenses and permits have different rates.