If you're interested in starting an LLC in Ohio, knowing the steps to do so is important. The right knowledge can make the process much smoother, so in this article, I'll share with you all of the steps you'll need to take in order to start an LLC in Ohio successfully.
A Guide To Starting An LLC In Ohio
Are you starting a business in Buckeye State? Whether you’re setting up an LLC or just registering your trade name, a few fees, and processes need to be taken care of.
Forming an LLC in Ohio requires filing Articles of Organization (Form 534) with the Secretary of State's office, a $99 filing fee, and statutory agent information. The articles should include basic information about your business, such as its name, purpose, address, registered agent information, and duration (if applicable). After submitting this form and paying the required fees, getting approval from the state can take six weeks or more before you can set up the shop.
Registering Your Trade Name
In Ohio, businesses must register their trade names with the Secretary of State. This step is essential because it provides legal protection - making sure no one else is using your company’s name (or something similar) in the same state or nationally.
Make sure you check with your county’s records to ensure that no other businesses in your area already have the same name before submitting your paperwork! Once approved, you will be issued a certificate confirming registration.
Securing Your Statutory Agent(s)
Every LLC in Ohio needs to designate an individual or organization as its statutory agent — someone who agrees to accept legal documents on behalf of the company in case of any disputes or lawsuits. You can designate yourself as a statutory agent or hire a third-party provider. This generally costs around $49/year.
The Importance Of Correcting Any Paperwork Errors
If you've made any mistakes on your paperwork, filing for a Certificate of Correction or Form 612 as soon as possible is essential. This will help ensure that your business is legally compliant with Ohio's regulations. Plus, it will save you from having to refile all of the paperwork again later on down the line.
Obtain An Employer Identification Number (EIN)
Obtaining an EIN is the best way to protect yourself against theft or fraud. It allows you to separate personal assets from those related to your LLC, giving you added peace of mind. You can obtain an EIN by filing IRS forms SS-4 online or by mail. Keep reading for more information about the EIN in the next section.
Open An Exclusive Banking Account
Having a separate banking account for your LLC is essential to differentiate between personal assets and those related to the business itself. It also makes things much easier when it comes time to file taxes each year—you won’t have to worry about sorting out transactions from different accounts! Look for banks that offer low-cost funds specifically for businesses like yours.
Research What Licenses/Permits Are Required
It's essential to research what types of licenses/permits are required for your particular field of business before getting started. Knowing what licenses/permits are needed will help keep your business in compliance with Ohio regulations and avoid costly fines. Some may even come at no additional cost if offered by local governments or organizations.
The Benefits Of Creating An Operating Agreement
Creating an operating agreement for your new LLC in Ohio can be the most important thing you do for your business before it starts. It will clearly define the roles and responsibilities of all members of the LLC, as well as set forth any special rules or regulations necessary for running the company successfully. An operating agreement also takes care of legal details, such as filing requirements, taxes, etc ., which can keep you from having problems.
In addition, an operating agreement serves as a reference guide for all members of the LLC. It helps ensure that everyone involved knows precisely what their rights and obligations are within the company—this is essential when it comes to avoiding potential conflicts between members and ensuring everyone is on the same page regarding expectations. Moreover, this document can help protect you and other members from personal liability if something goes wrong with the business.
What Is An EIN?
An EIN is a unique nine-digit number issued by the IRS to entities with employees such as corporations, partnerships, non-profits, trusts, estates, government agencies, and specific individuals. Just like an individual has a Social Security Number (SSN), companies use their EIN to identify the entity for tax purposes. An EIN acts like a Social Security Number for your business.
Why Do I Need It?
In Ohio, it’s required for almost all companies that have employees. With your EIN in hand, you can open a business bank account in the name of your LLC or another entity to separate your funds from your company. This also makes paying taxes easier because your business income and expenses will be tracked in one place. Additionally, if you plan to hire employees at any point during the life of your company (or even independent contractors), then having an EIN is essential so that they can be appropriately taxed and reported to the IRS. Without an EIN, they won’t be able to do their job legally or accurately note their income come tax time.
How Can I Get An EIN?
Obtaining an EIN is straightforward; visit the IRS website and complete Form SS-4 (Application for Employer Identification Number).
Depending on how quickly you need it processed, there are two options: mail or online through their secure website portal. Applying online typically takes about 15 minutes, so it’s often recommended if you need it quickly; however, if you prefer traditional mail, sending Form SS-4 will suffice as well.
Once the IRS receives your application, they will email or mail back confirmation of receipt within four weeks containing your new Employer Identification Number (EIN).
Registering Your Business Out-of-State
If you’re looking to open an out-of-state LLC in Ohio, there’s no need to worry! All it takes is filing Form 617 with the Secretary of State for only $99! Once accepted by the SOS, out-of-state entities may conduct business activities in Ohio just like any other foreign entity registered here would do. However, certain businesses may require additional licenses or permits from other state agencies before operating legally within Ohio's boundaries.
How To Choose The Perfect LLC Name For Your Ohio Business
Choosing a name for your business is a big decision. You want something that will stand out and represent you and your brand. Here are the main factors to consider.
Name Reservation (Form 534-B)
Filing for Name Reservation (Form 534-B) is one of the best ways to ensure that your desired title is available and won’t be confused with any other businesses operating in Ohio. This form can be filed online or by mail and does come with a $39 fee. If you file this form, it will reserve the name of your LLC for up to 120 days from the date of approval, giving you plenty of time to complete all required paperwork necessary to register your business as an LLC in Ohio.
Assumed Trade Name (Form 534A)
Suppose you don’t want to go through the process of filing Form 534-B and paying the associated fee. In that case, it's still possible to register and use an assumed trade name without having your official legal registered LLC name filed officially.
This requires filing Form 534A, also accompanied by payment of another fee. However, doing so only allows protection from names that may already be registered as trade names in Ohio; it does not protect terms already being used as registered LLCs in the state. So if you are seeking complete protection from using someone else’s business name, filing Form 534-B is recommended over filing Form 534A alone.
The Commercial Activity Tax (CAT) is a gross receipts tax administered by county auditors. Depending on your location and industry, this tax rate may fluctuate, with various deductions and exemptions available. Even if you’re exempt from corporate income taxes, you might still be liable for CAT―which is why seeking advice from an accountant can prove essential in understanding your liability.
The Ohio CAT is imposed on businesses for the privilege of doing business in the state. It’s a gross receipts tax―meaning it applies to revenue regardless of whether or not that revenue leads to a profit―and is assessed on businesses based on their total annual taxable gross receipts within Ohio from all sources. Companies paying CAT are issued an Annual Filing Form and must renew their license yearly even if they owe nothing in taxes. This form should be filed annually no later than April 15th for the previous calendar year.
Who Pays CAT?
The Ohio Department of Taxation has outlined three categories of business activity subject to CAT: sales of tangible personal property; rendering services; and activities related to intangibles such as interest, royalties, rentals, leases, etc.
To determine whether or not you are liable for this tax, speak with an experienced accountant who can provide detailed guidance tailored to your company's specific needs.
How Much Does It Cost?
The answer is that it depends on the taxable gross receipts. There are also exceptions depending on industry type, such as financial institutions, which pay at different rates depending on their size and type of institution. Hence, checking with your accountant about your specific situation is essential. There may also be exemptions available depending on various factors such as company size or industry type, so again it's best to discuss these options with your accountant before filing any returns or payments related to CAT taxes owed.
What Are The Benefits Of Forming An LLC An Ohio LLC?
There are many benefits to forming an LLC over other types of business organizations, including:
Appointing A Registered Agent For Your Ohio LLC
Establishing an Ohio LLC requires appointing a registered agent with an address in the state or authorized to do business there. Whether it’s an individual or a company, your registered agent needs a physical street location.
What Is A Registered Agent?
A registered agent is an individual or organization within the state of Ohio that has agreed to accept legal papers on behalf of your LLC should it be sued by someone else. A registered agent can be an individual such as yourself, another member of the LLC, or someone outside the company, such as an attorney or third-party service provider who offers this type of service for businesses like yours. They must have either their address in the state of Ohio or be authorized to do business there.
Why Does My LLC Need A Registered Agent?
It’s essential to appoint a registered agent for your LLC because you may miss out on important notifications from the state, such as notices about taxes or fees due. Additionally, having a registered agent can help protect you and other members of your LLC from being personally served with legal documents if they are sued. If someone were to file suit against your business, they would file it against the registered agent instead of any individuals associated with the LLC directly.
Ohio Department Of Taxation Registration
If your company has employees or collects sales tax, you'll need to register with the Ohio Department of Taxation (ODT). You can do this through postal services by filling out a few forms or signing up for their digital platform, making filing much easier and faster.
Requirements For Naming Your Business
When naming your business, there are specific requirements that must be met. For example, all LLCs must include either “LLC” or “Ltd” at the end of their names. Additionally, some words such as “bank” or “trust” require approval from the Division of Finance al Institutions before they can be used in a business name. If your request gets denied, don't worry; we've got a one-year free hold on canceled titles, so corrections can be made without having to re-choose!
Tips For Choosing The Perfect Name
When deciding on a unique and memorable name for your Ohio business, here are some tips that may help make your decision easier:
Conclusion
Creating an LLC in Ohio is a great way to protect yourself and your business from financial liability. When setting up your LLC, pay close attention to all the requirements and paperwork that need to be filled out, such as operating agreements, tax filing registration, commercial activity tax filings, etc.
Following these steps can help ensure you comply with all the necessary regulations and prevent any issues.
