Starting LLC in Ohio: Peculiarities & Detailed Manual
Want to start an LLC in Ohio? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Ohio, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Ohio LLC: The Notion & Essence
Many Ohio business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Ohio puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Ohio’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Ohio obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Ohio’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Ohio and will help you to start an LLC. The agent can be an Ohio resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Ohio notifies:
- The registered agent can be any adult who is a legal resident of the state. Though a corporate attorney may recommend someone who acts as an official agent for multiple companies. Alternatively, you can search the Internet for “official Ohio agent service providers” and find an agency that provides agents.
- He/she must have a physical address in Ohio.
- The registered agent is responsible for sharing information about any legal process with the project.
A registered agent guarantees an excellent reputation for your Ohio LLC. Also, if your business gets worse, Ohio can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Ohio, you must file the Articles of Association with the Ohio State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Download the Articles of Organization for a Domestic Limited Liability Company pdf file here. Then print the form, fill it out and send it by mail. You also have an alternative: apply online using the Ohio Business Filings.
The Cost of Filing an Application for LLCs Registration: An LLC formation in Ohio will cost all business owners $99. The state secretary undertakes to process an application for registration of an LLC within no more than five days from the date of its receipt.
For the process to proceed as quickly as possible and without pitfalls, business owners can pay a commission from $100 to $300. On an expedited basis, the state will process your application from five to 48 hours. Please note that the processing of LLCs application will begin only after the Office of the Secretary of State is convinced that you have submitted the documents correctly and in full.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Ohio, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
It is the nature of your business that determines what taxes you need to pay to the State of Ohio! If your company operates as a sole proprietorship or partnership, you need to fill out individual cess returns and pay income tax.
The owners of LLCs, which have the status of corporations, are exempt from income cess. Note that if you own a business in Ohio and earn $ 155,000, you are required to pay business cess. Find out more about this charge here. All LLCs that sell goods at retail must also pay sales tax to the state treasury. In Ohio, this is about 5.8%. If you still have questions about sales cess, read here!
The situation is a little more complicated with business owners and LLC who have a staff of hired employees. They must control the deductions for the payment of taxes on employees’ salaries. Your company must withhold and forward this portion of the salary to the state.
More information on this issue is available here. Ohio also obliges all employers to contribute to the formation of a fund from which unemployment benefits are paid. Business owners should consult on unemployment fund deductions in the Ohio Department of Job and Family Services. So these are the general taxes that you have to pay to the state of Ohio.
In addition to them, the state puts forward several charge requirements (cess on horse racing, charge on replacement tires, etc.). The entire list of government deductions from business owners is available here. The State of Ohio cares about those who conduct business honestly and openly, so it is possible to use simplified charge filing services at the Ohio Business Gateway.
Local Tax Business Demands
It is noteworthy that some Ohio counties also levy extra taxes towards LLC. Consult here for accurate information on all sales cess rates with exact counties. It will help you avoid getting into trouble if, for example, you have unknowingly failed to pay the school cess that many counties charge.
As you can see, the issue of paying various taxes is very acute. It is better to get it during the consultation so that your LLC or business does not have to pay extra fines.
Stage №6: Getting Business Licenses & Permits
Doing any business in Ohio requires licensing! Register at the office of the Secretary of State and get the appropriate LLC license!
Ohio is authorized to license various businesses and industries, including aviation, agriculture, and more. All owners of business projects and LLCs need to familiarize themselves with the file of federally-regulated industries that must obtain federal business licenses.
Ohio also licenses and permits businesses and LLCs operating in various industries. Ohio has developed a list of licenses, which includes about 300 titles. Such a wide list assumes that your LLC will find its qualifications. Search the Ohio license database here. Please note that local authorities also have strict requirements for business licenses and permits.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Ohio Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
You must report on all of your income (during the current fiscal year) through the appropriate reporting forms. It does not matter if you first earned something and then lost it. Rules, forms of collection of financial reports are available here; Annual reporting.
LLC owners are not required to submit annual reports to the Ohio state secretary. However, if there are any changes in your business, it is better to submit the relevant information to the state secretary.
Referring to the services of a qualified accountant
Never try to manage the finances of a new business if you do not have accountancy qualifications and experience in this area! It is very painstaking work, and non-professionals often make mistakes, due to which they lose a lot of money and time in the future.
Make sure that your project has an accountant who has access to the appropriate software. At the same time, you can track all transactions yourself, but get regular consultations from professionals!
When starting a new business, be sure to take care of all the nuances in advance! So you can not only quickly register your LLC but also conduct business and get pleasure.