Steps to Setting Up an LLC in Ohio
Starting an LLC in Ohio is pretty straightforward, as an LLC is the simplest business entity you can form and operate in the United States. Read on to learn all the steps involved in forming an LLC in Ohio.
An LLC, short for Limited Liability Company, is a legal business structure that allows you to own and operate any form of business, and hold assets.
With an Ohio LLC, you're not personally liable for debts incurred by your business.
To start an LLC in Ohio you need to:
- Decide on a Business Name for your Ohio LLC;
- Nominate a Statutory Agent;
- File the Articles of Organization with the Ohio SOS and pay the fee;
- Get an EIN from the IRS if you plan to hire or open a business bank account;
- Register with the Ohio Department of Taxation.
LLC stands for limited liability company, which is a US business entity that can protect the personal assets of a business owner from business debt and lawsuits. Unlike corporations, LLCs are relatively easy to form and maintain and are not subject to double taxation.
Name Your Ohio LLC
This is the first and most important step to starting a Limited Liability Company. Your LLC name should comply with the naming requirements of Ohio.
Make sure that the name you chose for your LLC is original and different from already existing and registered businesses in Ohio.
It is advisable to carry out a thorough LLC entity search on the website of the Ohio Secretary of State (SOS) to help you confirm whether your preferred LLC name is still available or is already in use.
Also, be sure not to use a name that could be confused with any government agency. You may need additional paperwork to be able to use restricted words like University, Bank, Insurance, etc.
The law in Ohio demands that you have to include a designator at the end of your LLC name. Approved designators for an Ohio LLC name are LLC, L.L.C., Ltd., Limited, and Limited Liability Company.
Nominate a Statutory Agent
When forming an LLC in Ohio, you're required to appoint a statutory agent with a registered office in Ohio. The duties of the Statutory Agent (referred to as Registered Agent in other States) is to accept legal mail/correspondence on your behalf and serve as a contact between your business and the State.
Your appointed statutory agent must be someone who has an address in Ohio and is authorized to make business transactions in the State.
You may choose to represent yourself as your own registered agent if you feel up to handling all the paperwork involved, the tedious routine of tracking notices and annual report due dates, and also don't mind losing some privacy as whatever address (home address, inclusive) you listed as your contact will be on public record.
Statutory Agent Service
It is recommended to hire the services of a professional registered agent in Ohio to manage all the paperwork, follow through with the LLC registration processes and represent your business.
Even though the services of a professional registered agent may cost between $120 to $300 annually, the stress you will be spared is well worth the money. For online businesses that have no physical location, using a commercial registered agent is a better option than exposing your home's privacy to the public.
A statutory agent (or a registered agent) is an individual or a business entity that has been designated by the LLC to receive service of process notices, government correspondence, and compliance-related documents on behalf of the LLC. The statutory agent must be residing in Ohio.
File the Articles of Incorporation with the Ohio SOS
To form an Ohio LLC you'll need to file the Ohio LLC Articles of Incorporation (same as the Articles of Organization in other states) with the Ohio Secretary of State for a non-refundable fee of $99. This can be done online or by mail, and the processing times can take up to 7 days.
The Ohio LLC Articles of Incorporation require you to submit information such as your LCC name, period of existence, effective date, LLC purpose, name and address of Statutory Agent, etc.
To file your formation paperwork online, please visit the Business Filings page of the Ohio Secretary of State website.
File by mail
To file your Articles of Incorporation by mail, please send the completed form with a check enclosed to:
Ohio Secretary of State
P.O. Box 670
Columbus, OH 43216
What is The Cost of Forming an LLC in Ohio?
The LLC filing fee, or the "Articles of Organization fee" is $99 regardless of which method you choose to file the documents (online or by mail).
Ohio is one of the few states that has no annual fees and no annual reports are required to maintain your Limited Liability Company.
You can compare the cost of incorporating in Ohio and other states on our LLC filing costs page.
LLC Formation Processing Times
If you file your Ohio LLC online, the approval time is usually 2-3 business days, but it can increase to 3-4 days if the volume of filing is high.
For applications sent by mail, it takes 3-7 business days for the Ohio SOS to approve your Articles of Incorporation after having received the documents.
Make an Operating Agreement
An Operating Agreement is a legal document that outlines who the owners of the LLC are, and the company's operating guidelines.
It documents what belongs to who, how taxes are to be paid, the profit-sharing formula, etc.
This document, however, is not to be filed to the State but should be kept among your business records for future reference.
Although you don't need an operating agreement to start an LLC in Ohio, it's necessary that you get one for the resolution of any disagreements that might arise in the future.
It's equally advisable to have an operating agreement even as a single-member LLC.
An operating agreement is an internal legal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, the ownership structure, and operating procedures.
Apply for an EIN - Employer Identification Number
After your LLC has been approved you'll need to obtain an Employee Identification Number (EIN).
This is a nine-digit number with which the Internal Revenue Service (IRS) identifies your business for taxations.
EIN also goes by the name FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
It's your business' Social Security Number sort of and it is required for opening a business bank account, filing taxes, and hiring employees. It can be easily obtained for free from the IRS, either online or by mail.
EIN stands for Employer Identification Number. EIN is a unique nine-digit number assigned by the IRS to help identify your businesses for tax and filing purposes. An EIN is sometimes referred to as a FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
Ohio State Taxes for LLCs
LLCs in Ohio are required to register with the Ohio Department of Taxation for payment of State and local taxes. LLCs don't have to file a separate return for federal taxes.
Taxes accrued by your LLC are usually listed in your personal tax return on a Schedule C.
Upon getting an EIN you will be presented with the different tax structures available for LLCs in Ohio.
The majority of LLCs opt for the default tax status, and some choose the S corp status in order to minimize federal taxes.
We recommend you get an accountant to help calculate the taxes accurately as this process can be quite complicated, and incorrect calculations might attract some sanctions against your LLC.
Just like in many other States, business licenses are not issued by the State, you'll need to apply for the necessary licenses and permits if your business needs them.
This usually would depend on your industry and the locality (city/town/county) of your business.
You need to find out if you need a license or permit to operate within the vicinity.
To make things easier for yourself, hire a professional licensed company to handle this.