Ohio is a very business-friendly state. LLC’s are the only form of business entity you can use in Ohio if you want to protect your personal assets. Suppose your company has international partners, products, or manufacturing abroad. In that case, it’s even more critical that you have an LLC to protect yourself and your company from liability in different territorial jurisdictions.
Fortunately, getting an Ohio LLC is not hard at all and can be done by any member of the LLC by filing articles of organization with the secretary of state for just $40.
After you decide to start an LLC, you have to pay attention to:
1. The LLC name
2. The type of LLC
3. The duration of the LLC
4. The state in which you want to file your articles of organization
5. The number of members to be included in the LLC (how many people are going to share in this business) and, if possible, their full names and addresses
6. Whether or not you need any additional documents such as articles of amendment of articles of designation filed with the secretary of state. Also, if you want your members to be able to vote on certain issues such as annual meetings or directors meetings, then these documents will be needed too
7. Any other issue that needs to be addressed.
The type of business entity you choose is important too. LLC’s are the only way you can protect your assets in Ohio, and there are many tax advantages to forming an LLC too.
This article will be a step-by-step guide on how to form an Ohio LLC, choosing the name for your LLC, address of the company, duration of the business, and file articles of organization with the secretary of state. Then we’ll go through the different types of Business Entities in Ohio (with their pros and cons) that you can use, if necessary.
Starting an LLC in Ohio Is easy.
You can start an LLC in Ohio with just $40.00. To get started, you need to get an “Articles of Organization” signed by the members of your LLC. Members are called “members,” not directors, officers, or shareholders. Members are people who own a share in the business. It is recommended that you have at least two members in your LLC and that the members be individuals, not other LLCs or corporations. You can also start an LLC without the members, but the Articles need to be filed with an agent of the secretary of state. Suppose you don’t have a signed Articles of Organization. In that case, it is very difficult to get your initial LLC “Certificate” from the secretary of state because until you have that initial certificate, you can’t start doing any business and cannot hire staff. Also, Ohio law stipulates that if you are a member in good standing with your LLC, then you are considered an officer and director for all purposes except in limited circumstances.
Here is a general outline of what you need to get started:
STEP 1: Name Your Ohio LLC
Your Ohio LLC will be a Limited Liability Company.
Choose a name that describes your business and is easy to spell (like ‘Income Tax Lawyer’ or ‘Tax Consulting Firm’ etc.). There are no special requirements for the name in Ohio. You can even use abbreviations, as long as they are easily readable and spellable (like ‘Income Tax Lawyer’, or ‘Ltd.’).
You can find a name at NAMECO, Inc. They have a database of millions of legal business name variations.
Start by searching by state using the name you have chosen above, and then go to your condition and select Limited Liability Company > Limited Liability Company (LLC). You can show your file number when making contact at this point.
STEP 2: Choose a Statutory Agent in Ohio
A statutory agent service is required by statute to accept legal documents and notices on behalf of your company, so you will need to appoint someone in the state of Ohio. The secretary of state recommends that you select an attorney or a CPA to be your Statutory Agent in Ohio.
It is not possible to use a relative, friend, or any other person you want to be your statutory agent unless they are admitted attorneys and CPAs licensed to do business in Ohio.
There are no specific requirements for statutory agents. The only requirement is that they reside in Ohio.
You cannot use non-resident agents, corporations, or LLCs as statutory agents.
Suppose you don’t have a Statutory Agent. In that case, it will be very difficult for clients and legal authorities to reach you if an emergency arises with your company and legal matters need handling.
STEP 3: File the Ohio LLC Articles of Organization
You will need to file the articles of organization with the secretary of state within 30 days of forming your LLC. You can do this online at www.sos.state.oh.us. If your business will be a corporation, you must file with the Ohio Secretary of State by certified mail. You can also file in person or by regular mail. State fees are $40 and you must provide the statutory agent’s address that you registered previously. If you are filing online, the $40 will be paid by credit card or e-check.
STEP 4: Create an Ohio LLC Operating Agreement
The LLC Operating Agreement is a document that lists the company’s members, managers, and officers and provides any other rules for how your LLC will operate. This allows you to control how your limited liability company will operate, how you will make decisions, who will be responsible for what duties in your business etc. It’s a way of keeping things organized and in order.
STEP 5: Get an Ohio LLC EIN
Your LLC will need to apply for an EIN (Employer Identification Number) from the IRS. This is your tax identification number. You will need it to run your LLC business for taxes and reporting purposes.
You can apply for an Ohio EIN online here www.entp.org/EinForOhio
The cost is $20 and takes about five days to process. I’d recommend applying as soon as possible after the LLC is formed.
Secure insurance for Your Ohio LLC
If you decide to use a formation service, make sure they buy the liability insurance for your Ohio LLC. It’s required by law. Securing a business bank account is also required by law in Ohio. If you use a formation service or an attorney to form your LLC, they will cover all the details.
If you use a legal services firm or an attorney, it’s not impossible to get started in Ohio without an attorney. You will need an Ohio EIN and insurance for the LLC. That’s no problem if you get help from the formation service or an attorney that specializes in business formation. You can show them your Articles of Organization and have them do all the work for you.
Ohio LLC FAQs
Q: How long does it take to form an LLC?
A: It depends on how fast you want it done. Most are completed within five business days. Others can take over 60 days, but we can usually get them done much faster.
Q: What do I need to form an Ohio LLC?
A: To start a limited liability company in Ohio, you will need the following: Social Security Number, Name Confirmation (of at least three people that are willing to be members), and an EIN for your LLC.
Q: What types of businesses can I form an LLC to operate in Ohio?
A: There are two main types of business groups that have formed LLCs. The first is a professional service business group (tax, law, medical, accounting, etc.) The second type is a trade or manufacturing business.
Q: What are the advantages of using an LLC to operate my business?
A: Consider the benefits:
- You get limited personal liability. A sole-proprietorship can often have unlimited liability for business debts and obligations. An LLC protects you and your business from this type of liability.
- An LLC is a pass-through entity, which means that profits and losses pass through to the members, which is the way it should be for a small business group.
- An LLC protects you from personal liability for business debts, contracts, and lawsuits.
- The cost to form an Ohio LLC is reasonable.
- It’s very easy to form an Ohio LLC yourself. It’s advisable to get legal advice before filing your own articles of organization with the Secretary of State since incorrect filing requirements could result in a $100 fine against the author of the articles or the company being forced into involuntary dissolution by the Secretary of State.
- There are significant tax benefits to forming an LLC.
- The administration is easier since regulations are simpler with an LLC.
Tasks After Forming Your LLC
The first order of business after forming an Ohio LLC is to buy liability insurance for your business. You need to do this immediately.
A good LLC insurance policy covers risks such as:
- Third-Party Liability (protects you from someone else getting hurt, causing them to sue you, or vice versa).
- Property Damage Liability (if someone is injured in your business and they sue you for damages, you need to be covered for it).
- General Liability (if you sell something that you are not supposed to, or a substance in your business causes people to get sick).
- Product Liability Insurance (if someone buys your product and it hurts them, they may sue you for damages).
- Workers Compensation Insurance (this coverage pays for workers’ medical bills if they get hurt on the job, including their lost wages from being injured).
- Business Automobile Insurance (covers your business cars and trucks in case of an accident).
- Workers Comp Self Employment Health Insurance.
- Optional Business Owner Policy (this is a specific type of insurance to cover you and your family, but not your employees if something happens to you).
- Professional Liability Insurance (this is extra coverage for professionals who work in business such as CPAs, lawyers, doctors, etc.).
- Commercial Property Insurance (covers all of the assets of your business in case they are damaged or destroyed).
- Business Income Protection Insurance.
Elect the LLC’s Form of Federal Income Taxation
The first step of this process is figuring out what form of federal taxation your LLC will have. There are three main options:
This is the easiest option. There are no additional tax forms to file, and it’s easy to run your business this way. However, you don’t get any of the business-related tax breaks that come with an LLC or corporation.
This is a group of people who own and operate the business. The profit is split up based on the percentage of ownership each person has, but the tax burden is not divided up in this way. You are required to file IRS Form 1065 (Form K-1), which will show your personal income and how much you earned in your LLC.
Corporation (C Corporation)
This is the most confusing form of business. A corporation is treated as a separate entity to avoid personal liability by separating yourself from the company. However, you get taxed twice on profits (once at the corporate level, and then again at the individual level on your salary). You have to file IRS Form 1120 along with several other forms.
Most small business owners elect to keep their business a sole proprietorship or partnership since the complexity and tax burdens can be significant for corporations.
Apply for Business Licenses and Permits
A business license is not required in Ohio for LLCs. However, there are some regulations that you will need to comply with.
- Federal Employer Identification Number: This will allow you to pay federal taxes.
- State Tax Identification Number: This number allows you to pay state taxes.
- Zoning Permit:
- Employee Protection:
- Workers Compensation Insurance: If you hire an employee, you need to have workers’ compensation insurance.
- Business License: It is generally not required by law for LLCs to have a business license, but it’s always a good idea to check with your local city or county first. If you do need one, then many banks will issue them as well.
- Fire Safety Permit: Depending on the nature of your business, you may need a fire safety permit from the fire marshal’s office. Examples of businesses that would require this permit are hotels, restaurants, and dry cleaners.
If your LLC plans on selling items, or if the business operates from a particular property, you may need a zoning permit from your city or township.
Get Business Insurance
Once you have chosen the taxation rules for your LLC, you can begin to consider what type of insurance needs to be purchased.
Insurance for your business will protect your personal assets as well as the business’ assets. The most common type of insurance that you may need is an Ohio commercial general liability policy. This policy covers the liability protection of anyone injured in a business accident or caused an injury at work.
How to form an Ohio LLC online
To form Ohio LLC online, you need to follow these simple steps:
- Go to https://www.sos.state.oh.us/.
- Select “How to Form an LLC.”
- Fill out the online form and submit it.
How to form an Ohio LLC by fax
To mail or fax a Form LLC, you need to follow these simple steps:
- Go to https://www.sos.state.oh.us/?page=forml#fees.
- Select “Forms.”
- Select Form LLC.
- Select “View/Print Form.”
- Complete the form and mail or fax it to the below address.
Filing Fees: State:$75; Fax: $15; Federal:$25; Foreign: $50.
What Do I Do After My Ohio LLC Is Formed?
Once your LLC is formed, you need to forward the following information to the state so that your LLC is registered:
- Possession of your articles if you are in a state that does not allow online filing.
- The name, address, and phone number of the registered agent for your LLC is located in Ohio.
- Your EIN from the IRS.
- Your annual report (filing deadline is April 15) for your new LLC (Form LLL) if you did not already file an annual report.
How to Build Business Credit
The first step to building your personal credit is having a legitimate business address and phone number. You will also want to consult with a tax professional, an attorney, or a financial advisor who can give you a recommendation as to what kind of financing is appropriate for your new business.
Once you have this information, you can begin the process of obtaining a business loan. The amount of money that you will need is determined by the type of loan you are going to apply for as well as the size and type of your business.
How to Order LLC Formation Service
Once you have started the process of forming your LLC, the next step is to order your LLC Formation service from the Secretary of State’s office.
There are two types of LLC formation services that you can choose from:
- Online Ordering:
You can easily order your Ohio LLC Formation Service online at https://www.sos.state.ohio/. You will need to complete an online application and submit payment through credit or debit card, check, or money order made payable to “Ohio Secretary of State Treasurer”.
- Call Ordering:
You can also order your Ohio LLC Formation Service by calling the Secretary of State’s office at 1-800-325-ISSUE (1-800-325-4747). You will need to provide the above information (company name, business address, and authorized agent), your e-mail address, mailing address, and other information as requested in a telephonic interview.
How do I open a bank account for my Ohio LLC?
Opening up a bank account for your LLC can be a great way to monitor and manage your company’s funds.
Go to your local bank with the Articles of Organization and proof that you are a representative of the company (such as proof of ownership). The information that is required for opening a business account differs by the bank, so be sure to ask what is necessary at the time of application at your bank.
Why is it important to maintain business records?
Keeping good business records for your LLC is extremely important for a number of reasons:
- The IRS will audit your LLC’s tax report if they suspect any kind of fraud taking place. This means that it is very important for your LLC to keep records in order and organized so that they don’t have any reason for suspicion.
- Maintaining records for your company serves as a great reminder of what has already been done and what still needs to be accomplished.
- Having good records will allow you (and anyone else who is working with the company) to easily access important information such as employees’ salaries, which helps you keep track of how much money you spend on each employee.
- The type of business records that should be kept depends on the type of business your LLC is running. If your business is a retail store, then it would require more record-keeping than say a consulting firm. The most important thing to remember is to maintain enough records for all your transactions so that you don’t have any issues in the future.
- Always keep good records of your company’s finances, especially when you are doing business with other parties. You will want to make sure that everything that is going on is being recorded so that you don’t end up in a situation where you need to explain something that has happened and can’t provide the proper documentation.
- Keeping good business records also serves as a great resource for yourself and for anyone else who works on the company. You will be able to look back and see a history of what your company has done as well as find information about new opportunities or developments within your company.
- Having good records will also help on tax season, especially if your LLC needs to file a tax return. All your past year’s records can be very helpful when it comes to determining the taxes that need to be paid as well as any deductions that can take place.
- Most importantly, maintaining good business records will allow you to provide good service to your clients and maintain a good reputation in the industry. It only takes an occasional error or lack of record-keeping for problems to arise.
- Managing Your Business Properly. The most important part of running a business is ensuring that it is run correctly and efficiently. Being able to do your job properly is one of the biggest factors that will determine how well the company fares over time.
Can an Ohio LLC help me live more privately?
The use of an LLC can help you live more privately. By setting up your LLC, you present less of a financial threat to creditors and mortgage companies who may have previously been after your personal assets.
By forming an LLC, you can assign all of your debts and contracts to the entity that is now in control of the company’s assets. Your creditors will not see your personal assets in the company’s accounts.
How much does it cost to start an Ohio LLC?
The cost of starting an Ohio LLC is based on the type and size of your business. For example, a small business that is just starting out can easily form and operate an LLC for less than $100.
However, if you are opening up a large business in Ohio, the cost to start may be considerably higher. A small business that has assets or income of over $250 can easily start an LLC with less than $20,000. There are a number of other factors that can affect the prices of your starting an LLC, such as taxes, licenses, and legal fees.
How long does it take to start an Ohio LLC?
The time it takes to form an LLC in Ohio is based on the business’ activities and the completion of the necessary forms. Online LLC filing services can take as little as 10 minutes, while a paper application may take up to one week to process.
What should I know about Ohio LLC taxes?
Most businesses are allowed to deduct all the losses that they incur from their income as a normal business. However, if your business is an LLC, this becomes more complicated. The most common deduction that an LLC makes from its taxable income is for business expenses.
As an Indiana LLC (where you can form one without paying a filing fee), you are not taxed on distributions, assets, or profits of your company – which includes property purchased with funds raised from the sale of your product or service. The same is not true for your LLCs in Ohio. For example, if you formed your Ohio LLC specifically to sell your services and subsequently earned $10,000 in income from these activities, you would owe tax on this income. The reason is that the Ohio entity would be taxed on all of the income from its business activities (e.g., interest and dividends) to which it has no ability to reduce the amount paid for these expenses.
Do LLCs have to register with the Ohio Department Of Taxation?
Yes, Ohio LLCs have to register with the Ohio Department Of Taxation.
To register, you must submit a Certificate of Foreign Status to the Ohio Secretary of State.
How can I get an Ohio phone number for my LLC?
You can obtain a phone number for your LLC by opening up a P.O. Box (mailbox) in Ohio.
To obtain a phone number, you will need to fill out an application for the box with your name on it and list that you are representing an LLC that is registered in Ohio. Once it is submitted to the United States Postal Service, you will be able to take possession of your mailbox at any post office in the country.
Filing methods for an Ohio LLC
The first is to form and register your LLC in Ohio by completing the following steps.
- Register the Articles of Organization with the Ohio Secretary of State.
- File a Certificate of Registration with the Ohio Secretary of State.
- Receive your Ohio Professional Liability Insurance.
- Receive your Ohio Business License.
- Receive a mailbox for your company in Ohio.
The second method is to import and register the Articles of Organization and Certificate of Registration with the Ohio Secretary of State using commercial incorporation services or online filing services. The filing deadlines are also the same as stated above.
After this step, you will have an Ohio LLC formed and be able to operate within the state. It will also be able to hold bank accounts, file taxes, issue letters or bills for goods and services that you purchase from vendors, and enter into contracts with customers.
Ohio LLC approval times
Once the Articles of Organization and Certificate of Registration are filed, you will have to wait fifteen days for the Secretary of State to approve your LLC. During the next ten days, you will have to obtain your Professional Liability Insurance, a Business License, and a mailbox for your Ohio LLC.
A free mailbox for your LLC can be obtained in any United States Post Office. To obtain a license, you can either visit the Ohio Department of Commerce or fill out an application online.
After obtaining these documents and registering them with the Ohio Secretary of State’s office, the actual approval time will vary. It can take anywhere from five minutes to ten business days.
Ohio LLC maintenance
In order for your LLC to stay in good standing, you will also have to file an annual report each year that you want your company to remain active. This report is due before December 31st with a fee of $50. You will also have to file an updated list of members every three years by April 30th.
Appoint a Registered Agent
You can appoint a person to serve as the registered agent for your Ohio LLC. This person is responsible for receiving legal papers and notices, keeping books and records, and allowing you access to your business in the event of an emergency. You may also appoint more than one representative, but a single person will suffice for most LLC companies.
Receive Professional Liability Insurance
LLC University® recommends that all Ohio LLCs have Professional Liability Insurance. A professional liability policy can cover your business from its inception to the point at which it closes out its operations.
How to keep my Ohio LLC in success
There are several ways to keep your Ohio LLC in success.
1. Pass the test for your insurance license and required exams.
2. Make sure you get a good start-up package from your LLC service provider such as LLC University®.
3. File Your Ohio LLC business license with the state and obtain any other permits that may be required by other state or local government requirements such as the Ohio Department of Taxation, city and county authorities, or health authorities for businesses that handle food products, liquor, clothing, etc.
After all the steps are over, it’s time to start making money from your company. With the advice of your LLC service provider or other legal professionals, you can get your business started by setting up a website address, making deals with vendors and customers.
Keep your business in Ohio LLC in success!