How to Start an LLC in Ohio?

LLC in Ohio

If you have a brilliant idea and want to start a new business, then one of the best entity structures that you can form in Ohio is a limited liability company. The state provides several benefits that will not only support business growth but also help lower your overall formation and operational costs. You can opt for Ohio LLC filing online or offline, and there are several processes that you may need to undertake before applying for new business registration. You can even form a foreign LLC in the state especially if you plan on moving or expanding your business in this state.

What is Ohio LLC?

If you are planning to file an Ohio LLC application for registration, then it is important to understand what an Ohio limited liability company is. It is a type of business structure that is prevalent in the USA because it protects the assets of the owners from creditors and lawsuits, especially in the case of business debts. This type of entity is also considered to be a hybrid entity as it combines certain characteristics of a sole proprietorship, partnership, or corporation. You can choose to form a single-member LLC in Ohio or register a multi-member LLC. Once you file an LLC in Ohio, you can even opt for S Corporation tax status.

Benefits of forming an LLC in Ohio

As a business owner, you can choose to form a variety of entities, but if you start an Ohio LLC then, there are several distinctive advantages this type of entity structure offers. Let’s look at some of the top benefits:

• Separate legal identity – One of the important features of a limited liability company that you can leverage is that this type of entity is separate from its owner. An LLC has its own set of responsibilities, rights, as well as liabilities. This type of entity can own or use any real or personal property and is capable of investing funds or lending money.
• Limited liability protection – One of the greatest features of an LLC is that it offers liability protection to the company’s owners. So, if you file an LLC in Ohio, your personal assets cannot be used by creditors to satisfy the company’s debts or other financial obligations. Thus, the risk of loss for an LLC owner is minimized.
• Perpetual existence – If you file an Ohio LLC application, one of the advantages is that this type of entity will enjoy perpetual existence unless mentioned otherwise in the articles of organization. This means that if the company witnesses a change in ownership, that will not trigger any dissolution or cease to operate.

Start an LLC in Ohio

If you want to start an Ohio LLC, it is one of the best decisions. However, it is important to note that several processes will be involved in making the entity operational. Let’s take a look at some of the important aspects of starting your LLC in this state.

1. Choose the Ohio LLC name

One of the most important Ohio LLC filing requirements is a business name. The LLC name needs to be in the new business registration documents. Hence, it becomes important first to identify a business name and ensure it is compliant with the 2022 Ohio Revised Code. Let’s take a look at the important steps in this process.

• The name of your company must include a word, phrase, or abbreviation like “limited liability company,” “limited,” “ltd.,” “LLC,” or “L.L.C.,” pursuant to OH Rev Code § 1706.07 (2022).
• You must ensure the name is distinguishable from any other name in the state database.
• Certain business names are restricted in the state. For example, if you want to use the words ‘trust’ or ‘bank,’ you will first need approval from the Ohio Department of Commerce—Division of Financial Institutions. Hence, it is important to check the restricted name list or the words prohibited for business names in Ohio.
• You need to conduct an Ohio LLC search, also known as a name availability search, with the SOS.
• If the chosen LLC name is available, then you can file form 534b, also known as the Name Reservation / Transfer / Cancellation Application.
• You will need to submit this form along with a $39 fee to reserve the chosen LLC name.

2. Choose an Ohio LLC registered agent

If you have conducted an Ohio LLC search and reserved your business name, the next step is to choose a registered agent in the state. The law states that an LLC or any new or existing business operating within this state has to hire and continuously maintain an Ohio LLC registered agent pursuant to OH Rev Code § 1706.09 (2022).

3. File Article of Organization with the Ohio Secretary of State

Every new business needs to be registered in the state of Ohio. You can opt for Ohio LLC filing online or download Form 610 – Articles of Organization for a Domestic Limited Liability Company, fill it out and submit the same to the office of the secretary of state. You will need to submit Articles of Organization along with a fee of $99 and a cover letter pursuant to OH Rev Code § 1706.16 (2022). It is important to note that the Articles also contain a section called “Original Appointment of Statutory Agent or Acceptance of Appointment,” wherein you need to disclose information pertaining to Ohio LLC registered agent.

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4. Prepare the Ohio LLC operating agreement

If you are thinking of establishing your limited liability company in Ohio, then one of the important steps is to ensure you have an LLC operating agreement in place. This is an essential legal document, also known as a contract, that outlines the internal structure of a limited liability company. This document also provides in detail the responsibilities of each member and how the company will be managed. If you are filing an Ohio LLC application, then you can create the LLC operating agreement before or after filing of the articles. The information contained in the operating agreement should be in compliance with OH Rev Code § 1706.08 (2022).

• Statement of intent
• Relation among the members
• Duties of manager or members, including fiduciary duties
• Elimination or limitation of any and all liabilities
• The time period of operation
• Specified penalties or consequences subjected to member or assignee
• Eliminating or reducing proportionate interest in LLC for any defaulting member or assignee
• How it will be taxed
• Sharing of profits

5. Obtain EIN for Ohio LLC

Once you start an Ohio LLC, one of the important annual requirements will be to file state or business taxes on time. During the filing of taxes, you will need to include your employer ID number, also known as Employer Identification Number or EIN, in the tax return documents. This helps the IRS to associate the return being filed with the said LLC. This is a unique nine-digit number issued to a limited liability company by the Internal Revenue Service (IRS) for the purpose of identifying that entity. An EIN is also known as the federal tax ID number (FEIN).

Do you want to obtain an EIN in Ohio?

6. Check local licenses and permits

Once you have registered your limited liability company or applied for registration, the next area to focus on is applying for and obtaining relevant business licenses and permits. You will need to conduct an Ohio LLC search for licenses, as they can vary according to business activity and the location of your company. The importance of obtaining licenses and permits lies in the fact that you are able to operate in the state with ease. The business licenses for an Ohio LLC are categorized as under:

• Licenses issued by state agencies – Certain business activities require licenses and permits issued by a specific government agency as well as the county. For example, the Ohio Department of Agriculture (ODA) and the Ohio Department of Health (ODH) are responsible for conducting safety checks and issuing certain Food Establishment licenses. The Ohio Administrative Code, OH Admin Code 3701-21-02.1, governs the license fee and categories.
• Licenses according to Profession or Occupation – If you file an LLC in Ohio and you or your business are pursuing a specific profession or occupation, then licenses will be issued by different state agencies. Let’s look at an example to understand how this works.

  Example: If you start a business focusing on real estate appraisal, you will need to apply with the Ohio Division of Real Estate and Professional Licensing, Appraiser Section, for the relevant license. Similarly, if your business requires the expertise of professional engineers and surveyors, you need to ensure proper licenses have been obtained from the State Board of Registration for Professional Engineers and Surveyors.

• Licenses issued by City/County – Once you have filed an Ohio LLC online, you must also check whether your company requires any local permits. These are also known as city or county licenses. The types of licenses, fees, and renewals will vary according to the city or county your company is based.

7. Open an Ohio bank account

Whether you file an Ohio LLC application or register any other form of entity, managing finances is never an easy task. The financial aspect will take into account operational costs, expansion budgets, marketing costs, incoming and outgoing payments, and loans or grants, among others. Hence, it becomes extremely important to segregate your income and expenses from that of the business. This is where opening a business bank account can provide distinct advantages. It will not only help clean and automate bookkeeping but also ensure your company enjoys a good credit history.

8. Comply with taxes and other regulations

Once you file an LLC in Ohio, you will be required to comply with state annual maintenance requirements. One of the important requirements is that of a yearly report. The good news is that limited liability companies formed in this state are not required to file any annual report. If you create a domestic professional LLC, then you may be required to file a Biennial Report, which will cost $25.Apart from this, your company will be required to file different federal, state, and local taxes. Some of the taxes that you may be required to file as an entity include Commercial activity tax, sales and use tax, and withholding tax.

Learn more about starting an LLC in Ohio!

An Ohio LLC registered agent can help you register a limited liability company in this state, but you may have several questions about LLC formation, the cost of formation, and other aspects. Hence, we have created a special section called “Frequently Asked Questions” to address some of these queries.

Is Ohio a good state to form an LLC?

The state of Ohio is home to several top companies including several on the coveted Fortune 500 list. Some of the top names include Progressive Corporation, Sherwin-Williams, Cleveland-Cliffs, and Goodyear Tire & Rubber Company, among others. The state provides new and existing LLCs with several small business incentives, and there are other advantages as well. Some of the reasons why entrepreneurs prefer to start an Ohio LLC are:

• The combined state and federal corporation tax rate is the lowest among all 50 states.
• A growing talent pool
• Highly affordable cost of living
• There is a 0% state tax on corporate income
• Its proximity to major cities like Pennsylvania, West Virginia, Kentucky, Indiana, and Michigan
• Strong transportation and logistics infrastructure
• Ohio’s international trade is proliferating and is home to several Foreign Trade Zones (FTZ)
• The state offers several business incentive programs, including JobsOhio Workforce Grant, Community Reinvestment Areas
• Business Innovation Ohio Loan Fund, and Ohio Job Creation Tax Credit.

How do I know if my Ohio LLC name is available?

Once you have identified or chosen a business name in compliance with the LLC naming guidelines, you need to conduct an Ohio LLC search. This is also known as a name availability search and helps check the SOS database for name distinguishability. If the chosen name is available, then you can go ahead and reserve it.

How much does an LLC cost in Ohio?

If you want to start a limited liability company in Ohio, then you will be required to submit Articles of Organization for a domestic entity. The initial cost to file an LLC in Ohio is $99. If you want to expedite the process, then there will be an additional fee depending on the expedited service chosen. For example, the fee for 2 business day service is $100, while that of a four-hour service is $300. Apart from the initial cost, there will be other costs as well for different processes like name reservation, Certificate of Correction, and application for business licenses and permits.

Do I need a business license for my Ohio LLC?

Yes. A business license is required to make your LLC operational. You may incur a penalty if you conduct business without proper licenses or permits.

Can I set up a single-member LLC in Ohio?

Yes. You can set up a single-member LLC (SMLLC) in Ohio. The process and documentation will remain the same. You will need to reserve a business name and then file Articles of Organization with the Ohio SOS. You will also have to apply for appropriate permits and licenses.

What taxes does an LLC pay in Ohio?

One of the important Ohio LLC filing requirements annually is that of taxes. Since it is a pass-through entity, you will need to file personal income tax. You may also be required to file other taxes applicable in the state depending on the business activity, location, and employees.

Can I register a foreign LLC in Ohio?

Yes. You can register and operate a foreign LLC in Ohio. The process and forms for Ohio LLC application for foreign entities are different from that of domestic entities. You will have to file Form 617 – Registration of a Foreign Limited Liability Company, For a Foreign (Non-Ohio) Limited Liability Company, along with a fee of $99 pursuant to OH Rev Code § 1706.51 (2022).

How do I dissolve my Ohio LLC?

After filing Ohio LLC online, your company will be registered in the state. If you want to dissolve the limited liability company at any point in time, you will be required to file a Certificate of Dissolution for a Domestic Limited Liability Company. The filing fee for the same is $50.

Ready to form an Ohio LLC?

A Limited Liability Company is one of the popular structures in the USA as it offers several advantages over other entity structures. You can form a single-member or multi-member LLC and even register a domestic or foreign entity. If you want to form an LLC in Ohio, IncParadise, a reputable Ohio LLC registered agent, can assist you with the entire process of LLC registration in this state.