An Ohio LLC (limited liability company) is a great way to protect your assets and manage your business. With an LLC, you can quickly start your own business, build credibility, and keep more profits than if you had chosen another entity.
This guide will provide all the necessary information to get your business up and running quickly and easily.
How To Start An LLC In Ohio
Here are the steps to take when starting an LLC in Ohio.
Obtaining An Ohio Business License
You must acquire an official Ohio business license if you own a business in Ohio. You can quickly and easily obtain one by following the checklist provided on the state government website.
The list identifies the particular licensing requirements for each industry and details how to obtain the necessary licenses and permits. It's important to note that if individuals within the LLC sell tangible personal items or taxable services, the LLC must obtain a vendor's license from the Ohio Department of Taxation.
Choosing Your Business Name
Once you've determined the required licenses and permits for your business, it's time to pick a name for your LLC. Keeping a few rules in mind when deciding on a name for your LLC is essential.
First, your business name must include "LLC" or "limited liability company."
Second, it must be unique and distinguishable from another registered business name.
Thirdly, it cannot contain certain words such as "bank" or "attorney;" finally, it cannot include obscene language or phrases that suggest illegal activities.
Next up is appointing members of your limited liability company (LLC). As per Ohio law, all members must be at least 18 years old and legally competent. Additionally, each member should possess at least one percent of ownership interest in the company—although this may vary depending on how many members are part of your LLC and their respective shares of ownership interests.
Before becoming official company members, these individuals should sign operating agreements so that everyone understands their rights and obligations when operating an LLC in Ohio.
Cost To Start An LLC In Ohio
The standard filing fee for an LLC in Ohio is $99. This fee covers the cost of filing your Articles of Organization with the Secretary of State's office, which is required for any business formation. The filing fee also includes a certificate of good standing as proof that you have fulfilled all filing requirements and are legally authorized to conduct business in Ohio.
If you need your LLC formed quickly, you can expedite the process by paying an additional fee based on how fast you need it done. Expedited processing times range from same-day service ($150) to a two-week turnaround ($50). Keep in mind that the standard processing time for most LLCs is four weeks, so if you don't need your LLC set up right away, there's no reason to pay extra for expedited service.
In addition to the filing fees required by the state of Ohio, other services may be associated with setting up your LLC that incur separate costs. For example, suppose you live outside of Ohio and need a physical address within state lines.
In that case, you'll need to hire a statutory agent who can receive essential documents on behalf of your company. You may also need to make changes or updates to your Articles of Organization after they've been initially filed, which will require additional fees depending on what kind of changes need to be made and how quickly they need to be processed.
When To File For LLC Yourself And When To Get Professional Help
Personally, filing for an LLC is an excellent option if you have the time and expertise to handle all the legalities associated with setting up a business. It can also save you money since there are no fees associated with doing it yourself.
However, it requires extra time and effort on your part, as well as knowing the relevant laws and regulations in your state. If you don't have this knowledge or aren't comfortable dealing with the paperwork involved in filing for an LLC, this may not be the best option for you.
Hiring an LLC service can save you both time and money in the long run. Many services offer free filing for the first year, with annual fees in subsequent years. This fee typically covers preparing documents, handling filings, responding to notices from state agencies, and more.
Before deciding to go with a third-party service, it's essential to consider what additional services you might need down the road—such as bookkeeping or tax services—and whether that particular service provider offers those services.
Many business owners opt for a third-party service because it removes much of the hassle associated with setting up and managing an LLC while still allowing them to reap all its benefits.
The Ohio Revised Limited Liability Company Act - What You Need to Know
When starting an Ohio LLC, it's also essential to understand the updated law that went into effect on February 11, 2022. This revised law affects how one may file LLCs and how they are treated post-filing.
Under the new LLC Act, business owners must maintain a statutory agent (an individual appointed by the LLC whose primary duty is to accept service of process). If companies do not register a change of agent or fail to sustain an individual in the role, the state will send out notifications.
The state will reach out regarding the failed maintenance of a statutory agent. Should the LLC not update the agent information within 30 days of notification, the Ohio Secretary of State's office will cancel the business' registration and dissolve it completely.
Establishing an LLC in Ohio is a straightforward process. Simply file the necessary Articles of Organization with the Secretary of State's office, make applicable payments, or submit the required paperwork.
It's also essential to keep up with maintenance requirements such as filing annual reports and accurate financial records. Failing to do so can lead to hefty fines or even the dissolution of your company if you fail to comply with state laws and regulations.
The Articles of Organization for Your Ohio LLC
This document will legalize your LLC and include all essential information about it.
Before filing the Articles of Organization, there are a few pieces of information that you'll need to have ready. Here are some things you should gather:
Once all this information is gathered, you'll be ready to fill out your Articles of Organization and submit it for approval from the state secretary.
It can take ten business days for the state to review your application and approve it. Once approved, your LLC will be legally established in Ohio as a business entity.
Depending on the type of business you intend to run, you may also have to register with other state agencies, such as the Department of Taxation or various county offices. Before beginning operations, one must take all necessary steps to comply with state laws.
What Is The Certificate Of Authority?
The Certificate of Authority is an official document that certifies your business's status as a legal entity in Ohio. It serves as proof that your LLC has been properly formed and that it has complied with all of Ohio's laws and regulations governing LLC formation.
You must submit an Articles of Organization document to the state's Secretary of State office to obtain the certificate. This document must include specific information such as your company's name, purpose, registered agent, address, and other essential details about your business.
Obtaining a Certificate of Authority has many benefits for businesses operating in Ohio. First and foremost, it allows you to apply for an EIN (Employer Identification Number).
Securing an EIN is essential for filing taxes, opening a bank account, and gaining access to top-tier services such as credit protection programs or merchant accounts that facilitate financial transactions.
Furthermore, obtaining a Certificate of Authority makes obtaining any necessary business licenses or permits from local authorities easier since it proves that your company is legally registered in the state.
What Is An Operating Agreement?
There is one other document that is essential to a successful LLC – the operating agreement. Even though it's not required by law, having an operating agreement is beneficial.
An operating agreement is a document that outlines how your business will operate internally. It serves as a contract between the members of the LLC and helps establish rules governing financial agreements, disputes, and various forms of litigation.
In addition to being beneficial when disputes arise, an operating agreement clearly defines each member's rights and responsibilities within the company.
Doing so makes it easier to manage disagreements among members or make changes to operations should they become necessary.
The exact content of an operating agreement will change based on your business type, your individual needs, and any applicable state laws. However, some of the most common items found in an operating agreement include the following:
A formal document detailing roles, obligations, liabilities, etc., can help protect your business interests and those of its members should legal disputes arise. Without one, conflicts between members could be decided by courts based on state law instead of what's best for all involved parties.
Choosing The Perfect Name For Your Ohio LLC
Choosing a name for your Ohio LLC is essential. You'll want to ensure that your name is unique and accurately reflects what your company does, but it must also comply with the state's naming requirements.
A business should only use a name once it thoroughly researches prospective terms before settling on one. You can do this easily by searching on the Secretary of State's website or running a search through Google and other search engines to make sure no other businesses are using the same name as you plan to use for your LLC.
Furthermore, under no circumstances are words representing a government agency allowed in the business name without additional licensing documentation from the Secretary of State's office.
Obtaining additional documentation and licensure may be necessary if you wish to utilize restricted words in your business name. These words include Bank, Attorney, University, College, Insurance, and several others, which indicate that you may be providing services related to those industries.
Why You Need A Registered Agent
A statutory (registered) agent ensures that all legal documents are delivered to the proper recipient.
If there are any lawsuits, summons, or notices involving your company, the involved parties will send them directly to your statutory agent, who can forward them to you immediately.
A statutory agent helps ensure that critical legal matters aren't lost in the mail or overlooked. Having an up-to-date statutory agent also prevents potential delays in court proceedings due to forgotten paperwork or missed deadlines.
If you are considering nominating a statutory agent for your LLC, it can be either an individual (including yourself or one of your employees) or a professional service entity. However, they must meet certain criteria to qualify and fulfill their role:
Using An EIN In Ohio
An EIN will help employers manage their taxes at the state and federal level, open a business bank account, and hire employees. It also serves as a unique identification number for businesses that want to open a business bank account, hire employees, or file tax returns at both the state and federal levels.
You can obtain an EIN by mail or online through the IRS website. When applying for an EIN through the mail, you need to complete Form SS-4, Application for Employer Identification Number, which one can download from the IRS website. Once completed, you must mail it in by snail mail or fax with all required documents, such as your valid driver's license or passport, and must wait up to 4 weeks before receiving your EIN in response.
Alternatively, if you apply online via the IRS website, you should receive your EIN within one business day after submitting your application. Whichever method you choose, ensure that you confirm that the information in your application matches what was requested on Form SS-4; otherwise, your application may not be accepted by the IRS.
Dissolving An LLC In Ohio
Dissolving a Limited Liability Company (LLC) can be complex and tricky. But luckily, the state of Ohio has made it a bit easier by providing a single form—Form 616—that must be filed to dissolve your business officially.
Form 616 is an official document from the state of Ohio that must be filled out and filed to dissolve an LLC officially. It is available for both domestic and foreign LLC owners, and there is a filing fee of $50 associated with the form.
To begin the dissolution process, you must submit two copies of Form 616 and your filing fee. Once this is done, you will receive confirmation from the Secretary of State's office that your application has been received and accepted. At this point, you can begin the next steps toward dissolving your LLC in Ohio.
Once you have submitted Form 616 and paid the filing fee, it's time to start winding down operations. To do so, ensure all debts are paid off and all assets are distributed appropriately according to state laws. You should also ensure that any contracts or agreements related to your business are terminated or transferred over as necessary.
Finally, once all these tasks have been completed, you can file Articles of Dissolution with the Secretary of State's office to officially dissolve your LLC in Ohio.
Knowing how to start an LLC in Ohio and understanding the various steps and fees associated with the process can help you make an informed decision about setting up your business.
Whether you file for LLC or use a third-party service, it's essential to understand the laws and regulations that apply in Ohio and ensure you remain compliant.Further reading on MikeVestil.com: Here are a few other states to consider forming your LLC in: