Start an Ohio LLC Today
Everything You Need to Know About Starting an LLC in Ohio
As you may well know LLC, is short for Limited Liability Company a type of business entity. Let’s look at this in more detail.
What is a limited liability company?
The acronym LLC stands for limited liability company. In Ohio due to the business structure of an LLC it offers the personal liability protection of a corporation with a pass-through taxation of a sole proprietorship or partnership.
By forming a Ohio LLC for your business you are creating a great way to protect your personal assets in the event of your business being sued. This is one of the most popular reasons that people will opt for an LLC.
An LLC can be owned by a single individual or can be owned by more than one person. An Ohio LLC with one member who is known as a single-member LLC if your LLC will have more than one owner it will be known as a multi-member LLC
Below you will find our list of 8 steps to follow for starting your LLC in Ohio.
- Starting an LLC in Ohio
- Choosing a Name for your LLC
- Filing your Articles of incorporation
- Appointing a registered Agent
- Your New Employer Identification Number ( EIN ) from the IRS
- Tax and Regulatory Compliance
- Preparing an Operating Agreement
- Foreign LLCs doing business in Ohio
1. Starting an LLC in Ohio
The process is much simpler in Ohio than in many other states as there are no compliance requirements and fees, although basic details such as the statement of purpose must be given.
2. Choosing a name for your LLC
This first step is the most important one, you must create a unique name for your LLC and Ohio requires that :
- Your business name must include one of the following; Limited Liability Company, L.L.C., LLC, ltd.
- If certain words in your name are used then there are extra forms to file and a licensed individual may be required within the organization. Words such as; Attorney, University and bank. For example, if you are using the word Attorney in your name this requires a licensed attorney within the organization.
- Certain words are prohibited from use in the name and the reason therein is that they cause confusion. Words such as; Secret service, FBI and treasury.
- The name of your LLC must be unique from all other organizations that are based in the state of Ohio. You can cross reference any names using the Ohio Secretary of State’s business name database.
You may reserve a name for up to 180 days. File Form 534-B, called the Statement of Reservation of Name with Ohio Secretary of State’s online website.
You may also want to create a website name in the future. Make sure that a business email address is available for the name as part of your decision making process.
3. File your Articles of incorporation
Your third step is to file the Articles of Incorporation with the state of Ohio. You may file online, by mail or in person. No matter which way you choose to file you must submit the filing fee along with the documents.
Your Articles of Organization must include the name of your LLC, identity of a registered agent and disclose when the LLC will dissolve ( if applicable)
You can expedite the filing process for an extra fee of $100.00 and they will be processed within two business days, $200.00 for completion in one business day and $300.00 for processing within four hours ( providing that you bring the documents in person before 1:00 P.M. Please check with the Secretary of State as fees are subject to change.
4. Appointing a registered Agent
When you apply for an LLC in Ohio you must have a Registered Agent, who can be an individual or a business. A Registered Agent accepts legal paperwork on behalf of the LLC, state filings and documents of legal action.
A Registered Agent needs to agree to this before they are ever in a situation where an Agent is needed. The Agent must have a physical street address in Ohio and agree to share legal information obtained by the LLC.
5. Getting an Employer Identification Number ( EIN ) from the IRS
Think of this as a social security number for your business and it is required when you have two or more members in your LLC. An EIN is necessary when you are filing federal and state taxes.
And you can obtain one from the IRS. Go to the IRS website where you can submit the form online or through the mail. There is no fee for obtaining an EIN.
6. Complying with other Tax and Regulatory Requirements
Depending on your LLC’s specific structure, there may be more tax and governing necessities that it may need to abide by. If there is only one owner for the LLC , then there must be an EIN in place if you plan on adding employees or if you choose taxation as a corporation instead of sole proprietorship ( disregarded entity) .
The state of Ohio has a Commercial Activity tax that most business entities must abide by and this includes Single-Member LLCs.
Also, depending on where your business operates, there may be extra business licenses that the state or local area requires. If the LLC employees plan to sell products and collect sales tax on thm, then you must register with Ohio’s Department of Taxation.
The registration can be completed through the Ohio Business Gateway (OBG) either online or through the mail, in most cases. The Ohio Business Gateway website will provide the most current details.
7.Preparing an Operating Agreement
An Operating Agreement is a legal document that lays out the details of ownership and operation to guide LLC activities, including how owners will distribute income and liabilities.
For a single-member LLC, it can protect from personal liability. Although an Operating Agreement is not a requirement in Ohio for an LLC, it is strongly recommended, especially if the LLC has two or more members. Your Operating Agreement need not be submitted to the Secretary of State with the Articles of Organization.
Keep it on file though and this is done by the Registered Agent. In Ohio, Operating Agreements for Limited Liability Companies are viewed as governing documents.
8.Foreign LLCs doing business in Ohio
Every LLC created outside Ohio State’s physical boundaries has to be registered with the Ohio’s Secretary of State when it plans expansion into Ohio. A Registered Agent must be appointed by the LLC.
This agent is in place for service of process purposes and must be either a resident of Ohio with a physical address in Ohio ( can be a P.O. Box ) and they must check the box on the form saying “ Ohio Residence”, a corporation in Ohio, a foreign corporation that either has a business in Ohio or a license to conduct business in Ohio.
To register, you must file Form 533-B that is titled “ Registration of a Foreign Limited Liability Company” by mail and include the application fee as well as a certificate of legal existence or good standing in the home state of the business. The date on the document must be within sixty days before the certificate is filed.
It is advisable to get sound legal counseling before you start your LLC in Ohio.
Frequently asked Questions about an LLC formation
What are the benefits of an LLC?
The main benefits of an LLC and why it is a popular business entity are as follows.
An LLC offers the liability protection of a corporation with the benefit of pass-through taxation. In addition to this an LLC is affordable and very easy to maintain. Making it the most popular of business entities.
How is an LLC taxed?
One of the advantages and attractions of an LLC is called pass-through taxation. Meaning that the profits generated by the LLC will “pass-through” to its member/s. Your accountant will issue each member with a K1 who then reports the additional income on their personal taxes.
Checking with your state is always advisable as although LLCs are pass-through entities, there are several types of state-level tax that may still apply to your Ohio LLC and should be researched.