How to Start an LLC in Ohio: 7-Step Guide
Making the decision to form an LLC in Ohio can be difficult if you don’t know exactly what you’re doing. In this guide, we’ll show you how to start an LLC in Ohio, from selecting an original name to navigating Ohio state tax. Gain the confidence you need to start an LLC in Ohio quickly and easily.
Advantages of Starting an LLC in Ohio
So, why should you start an LLC in Ohio instead of a partnership, corporation or some other business entity? There’s no one-size-fits-all answer to this question and it may not be the right fit for you. However, Ohio LLCs do offer quite a few benefits for their members.
As the name implies, LLCs (in all states) offer a measure of liability protection for members. For instance, any claims against the business will be filed against the business entity itself, not individual members. Likewise, any financial liabilities owed by the business can’t be levied against the individual members.
Additionally, LLCs offer the choice between being taxed as a corporation or via “pass-through” taxation, wherein taxes are passed along to the individual members’ personal income taxes. Either way, neither the business nor the members will be double taxed. Ohio LLCs also have the flexibility to choose how profits and losses are allocated.
Before you choose the legal structure of your Ohio business, be sure to explore your options. If you believe an LLC is the way to go, the following steps will help you get off the ground.
How to Start an Ohio LLC: Step-by-Step Guide
Starting an LLC comes down to following a few simple steps, which our expert team outlines below.
1. Choose a Unique Name for Your Ohio LLC
Learning how to start an LLC in Ohio begins with naming your company. Ohio requires strict compliance with the naming requirements for your LLC. These guidelines include the following considerations:
- You must include “LLC,” “L.L.C.,” “Ltd,” “Ltd.,” “Limited” or the phrase, “Limited Liability Company” after your name
- You may not use language the could confuse the public that your LLC is affiliated with a government agency (e.g.: FBI, Department of Treasury)
- You have to be mindful of using restricted words (e.g., bank, attorney, university), as those might require additional paperwork
- Your name must be distinguishable and unique from other registered LLCs in the state by using the Ohio Business Search Tool
If your desired business name is available, you can reserve a name for a $39 fee up to 180 days prior to registering your LLC with a Name Reservation Form.
If you’re operating your business under a DBA (“doing business as”) name, you must register this name with the Ohio Secretary of State. You can do this online or you can complete the name registration by mail.
Inside Scoop: Trademarks and Branding
Just because your business name might be available through the search tool doesn’t mean it’s yours for the taking. Because business names can be trademarked, your best choice might be to trademark yours as well. Submit Form 555 with the Ohio Secretary of State to ensure your name is properly trademarked. On the federal level, visit the U.S. Patent and Trademark Office (USPTO) online.
Ensure your brand name is available as a website domain so that your customers can find you. Use this domain name search tool to see whether your name can be used as a URL. Getting a great domain name is essential if you want to extend your business reach beyond your physical location. It also doubles as a marketing tool for social media outlets.
2. Designate an Ohio Statutory Agent
An important part of learning how to start an LLC in Ohio is knowing how to appoint a statutory agent, also known as a registered agent in other states. This is the business entity or the person within your company that is designated to receive legal documents, tax information, service of process and other official notifications on behalf of your LLC. The statutory agent must be:
- 18 years of age or older
- Have an address where they can receive mail
- Be available to receive mail during regular business hours
Many companies have their founder as their statutory agent. This is a good idea if you aren’t planning on taking too many extended holidays, as you are required to be at your address during regular business hours. If this isn’t practical for you, consider appointing a company that specializes in holding this position.
Inside Scoop: What If My Statutory Agent Resigns?
If your LLC suddenly finds itself without a statutory agent you’ll need to find a new agent quickly, as your Ohio LLC is required to have one at all times. You’ll need to file Form 521 (“Statutory Agent Update”) with the Secretary of State with information about your new agent. This form must also be submitted if your statutory agent changes their name or address. Failure to do so can result in serious consequences such as cancellation of your LLC by the Ohio Secretary of State.
3. File Your Articles of Organization
Those who know how to start an LLC in Ohio understand the importance of submitting their LLC’s articles of organization with the Ohio Secretary of State. You need to complete Form 610 if you’re a domestic Ohio LLC and Form 617 if you’re a “foreign” LLC (registered in another state) doing business in Ohio.
To file the articles of incorporation in Ohio, you need the following information:
- The LLC’s name and address
- The name, address and acceptance of position from the statutory agent
- Effective date and existence period
- Business purpose
Receive Your Ohio Certificate
After three to seven business days, you will receive a stamped copy of your articles of organization. Congratulations! You are now officially registered with the Buckeye State and can open your business whenever you’re ready.
Inside Scoop: Quickest Processing Time
For quickest processing, complete the form online and pay the $99 fee. For expedited service (certification in two days), you can pay $199. You can mail the form instead of registering online, but it will take longer to receive the certificate.
4. Make Sure You Have Any Necessary Business Licenses
Knowing how to start an LLC in Ohio includes obtaining industry-specific licensure. Business licenses may be regulated by the federal, state, county or city governments. As such, you will need to check with each of these jurisdictions to ensure that your business doesn’t need specific permits or licenses for operation.
Choose your industry in the drop-down menu titled “Checklists” in Ohio’s Start a Business page to learn more about specific licensing and permitting requirements. Here are some examples of licensing requirements for certain types of businesses:
- Law firm. You must have passed the Ohio Bar Exam and be registered in good standing with the Office of Attorney Services in order to practice law in the state (actively practicing attorneys must pay a registration fee every two years)
- Barber shop. Barber shops are regulated by the Ohio State Barber Board, which issues licenses
- Restaurant. The restaurant business has numerous licensing requirements, depending on several factors (such as whether you serve alcoholic beverages and whether food is eaten on the premises)
- Tattoo parlor and body piercing. Your local health department regulates tattoo and body piercing operations, and you will also need a vendor’s license
- Brewery or winery. Ohio’s Division of Liquor Control regulates all wineries and breweries in the state, while the federal Bureau of Alcohol, Tobacco and Firearms also regulates these industries
Inside Scoop: Give Yourself Enough Time to Procure Licenses and Permits
Make sure you have a realistic sense of how long it will take to obtain the necessary permits and licenses. You probably don’t want to pay rent or other operating expenses while you’re waiting for the ability to actually bring in revenue. For example, it may take 10 to 12 weeks to get your liquor license after submitting the proper paperwork, assuming there aren’t any issues completing the background check.
5. Prepare Your Operating Agreement
An operating agreement is a contract that defines members’ rights and obligations, the governing structure of the company and the allocation of profits and losses. You’re not required to submit this document to the state but it’s best to create one to protect your business and its members. It will also help you manage your business as you grow and adapt to changes.
Choose a Management Structure
The 2022 Ohio law governing management structure allows for greater flexibility. Previously, the default provision was that the LLC was either member-managed or manager-managed in structure.
Now, Ohio provides flexibility to define your company’s structure on its own terms. This structure must be specified in the operating agreement. Many Ohio business owners find it’s advantageous to have their companies “manager-managed” to enable more control by the owners.
6. Follow Additional Rules for Employers
If your Ohio LLC has employees, then you’ll have additional obligations. These include reporting the required employee information to the Ohio New Hire Reporting Employer Services Portal within 20 days of their date of hire. Similar reporting of new employees is also required under federal law.
Also, Ohio is one of the few states that requires that you purchase workers’ compensation insurance from the state rather than from a private insurer. The Bureau of Workers’ Compensation (BWC) determines your rate and collects premiums. The filing fee is $120 with the BWC and you will need to file Form U-3 to get started.
Finally, you’ll need to set up an unemployment compensation tax account through the Ohio Department of Job and Family Services.
7. Comply With State and Federal Tax Requirements
Federal EIN
The federal employer identification number (EIN) is a nine-digit number assigned to businesses by the IRS. Your EIN will be necessary for opening a bank account, filing company tax returns, retaining employees and obtaining business licenses and permits.
Ohio Tax Registration
Most LLCs pay their taxes through the pass-through method of taxation where the members are responsible for declaring the LLC’s profits and losses on their personal income tax. However, you must pay Commercial Activity Tax if you have gross receipts of $150,000 or more. If that’s the case for your LLC, make sure to file with the Ohio Department of Taxation by submitting Form CAT 1 or by filing online through the Ohio Business Gateway (OBG).
Inside Scoop: Vendor’s License
If you’re selling tangible products, then you may be required to obtain a vendor’s license in Ohio. This comes with a $25 fee and doesn’t need to be renewed. However, one is needed for each physical location where you’re selling goods.
Still Unsure How to Start an LLC in Ohio? Speak With an Expert Today
Starting an LLC in Ohio can be difficult work, but it doesn’t have to be. Consider our list of best LLC formation services today to find ways to make it more quick and easy.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
