How to start an LLC in Ohio
When starting a new business, entrepreneurs must choose from a variety of different business entity structures. One of the most popular is the limited liability company or LLC. LLCs provide liability protection for the owners and are also relatively easy to maintain (compared to a corporation). In Ohio, entrepreneurs will need to work with the Ohio Secretary of State in order to start an LLC in Ohio.
The process of forming an Ohio LLC can feel complex, but it doesn’t need to. This guide will show you step-by-step how to file the Article of Organization, and complete all the other necessary tasks in order to start your LLC.
Consider utilizing an LLC formation service
First, you should decide if you will do the formation work yourself, or if you will opt to use a professional LLC formation service. There are pros and cons to either approach.
If you use a service, you will have one-on-one support and guidance to tackle the whole process. Services ensure that everything is done accurately, and also tend to speed up the process. The downside, of course, is the small fee that you will need to pay.
If you do go this route, there are two highly recommended companies: Northwest Registered Agent, and ZenBusiness. Both are excellent options, but Northwest is best known for exceptional service, while ZenBusiness is more budget-friendly (and starts at just $49).
The alternative to using a service is to complete the formation process on your own. This may take longer and require more work, but it’s cheaper. To do this, follow the steps below.
Name your new company
The first real step in your business journey is to choose a name for your company. This should be a name that is relevant to your industry, and hopefully one that is memorable to your customers.
The name must also be distinguishable from all other business names in the state of Ohio. To confirm availability, you can complete a business entity name search online.
Additionally, the name must meet certain requirements set out by Ohio state law. The name must contain “LLC”, “L.L.C.”, or “Limited Liability Company”. And the name cannot contain any restricted words, which include government-related terms, banking-related terms (these require additional permissions), profanity, etc.
Once you have selected a name that meets the requirements and is available, you can move on to the next step.
Using a Trade Name in Ohio
It is worth noting here that Ohio allows for the use of trade names, otherwise known as fictitious names or DBAs. Trade names are essentially secondary names that are used for branding purposes. They are added onto existing LLCs and allow the business to operate under the new trade name and/or the original LLC name.
For example, an LLC registered as “ABC, LLC” could register fictitious names for “ABC Plumbing”, or even “Cleveland Plumbing”. This allows for some flexibility in branding.
You must register a new trade name before using it. This costs $25, and can be done online.
Appoint a Statutory Agent
A statutory agent (called a registered agent in most states) is a representative of your business. Their main responsibility is to receive documents and communications on behalf of the business. Important tax documents, legal correspondence, and communications from the state will all be sent to the statutory agent, who then notifies the business owner.
The statutory agent you choose can be any Ohio resident, or any Ohio corporation licensed to do business in the state. You can be your own agent, but your LLC cannot serve as its own agent.
Most businesses take one of two approaches: Either they appoint the business owner/an employee to be the agent, or they hire a professional statutory agent service.
If you choose to hire a service, you will enjoy enhanced privacy (because the service’s address is used instead of your own), and a reduced chance of important documents being missed. Expect to pay $100-$150+ per year for a statutory agent in Ohio.
Two good options for a statutory agent service are Northwest Registered Agent and ZenBusiness. Both provide quality service, with registered addresses in the state of Ohio that meet all the state requirements.
Create an operating agreement
Note: This step is optional, but recommended.
Operating agreements are important documents that most businesses should complete and keep on file. They are simply kept internally, however, and are not required to be submitted to any government agency. As such, they are optional.
What is an operating agreement? It’s basically a legal document that establishes certain important details about your company. Namely, this includes the operating procedures of the company, as well as the ownership structure for the business.
It is this last point that makes operating agreements so important: They formally establish the ownership rights of the company. This reduces the risk of future ownership disputes and is particularly important for any LLC with multiple owners or stakeholders.
File LLC Articles of Organization
The formal documents that must be filed with the Ohio Secretary of State are called the Articles of Organization. This process can be completed by mail, or online. There is a $99 state filing fee in Ohio, which goes directly to the state.
To file online
Head to this link and follow the instructions to complete the Ohio Articles of Organization. Pay the $99 filing fee via credit card or bank transfer.
To file by mail
Download and fill out this form (form 533A), and mail it, along with a check for $99 payable to the Ohio Secretary of State to:
Ohio Secretary of State
P.O. Box 670
Columbus, OH 43216
Then, simply wait for Ohio to process your documents. Depending on the current backlog, processing time may take 1-2 weeks or more. Online applications are generally processed quicker than mail applications. Additionally, if you use a service like ZenBusiness, you can pay extra for expedited processing.
Apply for an EIN
EIN stands for employer identification number. This is a federal tax ID number that is issued by the Internal Revenue Service (IRS) for businesses. This number is a requirement in order to hire employees, and may also be required for other important business banking activities, such as opening a business bank account.
It is free to apply for an EIN, and the process is quick. Simply fill out this application on the IRS website to apply.
Apply for business licenses & permits
Once your LLC is formed, you may still face some other requirements to actually start legally operating your business. This could include obtaining business licenses, specialty permits, health permits, liquor licenses, etc.
The specifics for your business will depend on the industry you’re in, and how regulated it is – as well as the location(s) of your business. You must satisfy all local, state and federal requirements, so you will need to do some research to confirm that your business is compliant.
Some common examples of requirements include state liquor/alcohol licenses, local health permits, professional licenses for certain professions, and environmental permits. There are hundreds of different permits/licenses, so some research will be required to figure out what your specific business needs. You can also check with officials at each level of government (city/county, state, federal) if you have questions.
This is also a good time to register state tax accounts for required tax activities. For employers, this includes registering for unemployment insurance tax through the Ohio Department of Job and Family Services, as well as employee withholding tax through the Ohio Business Gateway. If you plan to sell taxable goods/services, you will likely need a vendor’s license or seller’s use tax account.
Keep your business in good standing
Businesses will have various ongoing compliance requirements to stay on top of. This includes filing tax returns, renewing permits, and more. There are different requirements from every level of government – local city/county governments, state departments, and the IRS and other federal agencies.
There will be different requirements for different types of businesses and industries. With that said, there are some common requirements that will apply to most businesses, including:
Ohio Commercial Activity Tax – due annually for LLCs with over $150,000 in gross receipts
State tax filings
Ohio sales tax filings
Local tax filings (city/county)
Federal tax filings
Federal and state payroll/employer taxes
Business license renewals
Ongoing statutory agent requirement
There may be other requirements, as well. It’s important to do the research now to determine all the different requirements that your business may face. Then, make a list and create calendar reminders for key due dates. By starting off on the right track, you can ensure compliance from day one and keep your new company in good standing with all levels of government.
If you want some help with ongoing compliance, services like Northwest Registered Agent and ZenBusiness can provide a helping hand. They can help with certain filings, and send automated reminders of due dates to help keep you on track.
Open a business checking account
It is a good idea to open a business bank account as soon as possible after forming your company. Generally, this requires a business license, an EIN, and a small opening deposit – however, you should call the bank to confirm if they have any other requirements.
Having a dedicated business bank account is important because it allows the business owner(s) to separate their personal finances from the finances of the business. This is important for bookkeeping and accounting efforts, and also for protecting the owner’s personal assets from liabilities related to the business.
You can open an account at most financial institutions, so it’s simply a matter of finding a good option in your area. At this time, you may also wish to look into credit (a business credit card, or line of credit, for instance). You will also want to look into business insurance plans.