Starting an LLC in Ohio: A Step-by-step Guide

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Welcome to Ohio sign on long stretch of highway

Estimated reading time: 13 minutes

Named the second best place to start a business, and one of the top 10 wealthiest places in the U.S., Ohio is an economic powerhouse.

This is due to its business-friendly tax environment as well as it being home to major industries such as finance, biotechnoloy, transportation, and more.

Let’s dive into how to start an LLC in Ohio, step-by-step!

Choose a Business Entity for Your LLC in Ohio

To understand how to take your business idea and start a small business in OH, you need to understand entity formation.  Limited Liability Companies (LLCs) and Corporations are the most popular business types.

Corporation

A corporation is a legal entity created separately from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.

Limited Liability Company

LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.

There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)

Starting a Ohio business can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond startup formation, so you never have to wonder or worry about what to do next!

What About DBAs?

DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name. 

For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.

  • Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
  • LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.

A DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in OH, get the proper legal recognition early on to start off on the right legal footing. 

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Create a Business Name

Under Ohio law, an LLC name must contain the words “limited liability company” or “limited company” or the abbreviation “LLC” or “LC.” If you wish to abbreviate “limited company,” you must use the abbreviation “LTD CO.”

1. Follow the naming guidelines for a Ohio LLC:

  • Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
  • Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
  • Restricted words (e.g. Bank, Attorney, University) may require additional legal paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

Your LLC’s name must be distinguishable from the names of other business entities already on file with the Ohio Department of licensing and regulatory affairs. Names may be checked for availability on the State of Ohio’s name search website.

Ohio LLC Registration  

Let’s take a look at how to register a business in OH, including payables such as the cost, government fees, and so on.

Filing Fee & Articles of Organization

The Ohio Secretary of State charges $99 to file the Articles of Organization. The articles must include:

  • the LLC’s name
  • the LLC’s street address
  • the name and address of the LLC’s registered agent
  • the mailing address of the LLC’s initial principal office
  • whether the LLC is managed by members or a manager
  • the effective date of the articles
  • checked boxes showing the LLC’s size and general nature of business
  • signatures of the LLC’s organizer and registered agent.

The articles may be filed online or by mail. 

Operating Agreement

An LLC operating agreement (called bylaws for corporations) is not required in Ohio, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed.

This agreement also helps preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates. If you want to have a solid business plan of action, you need this document.

Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.

Ohio State Filing Fee:$99
Filing Time:7 business days

Mail to:

Ohio Secretary of State
P.O. Box 670
Columbus, OH 43216

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Get Your Employer Identification Number or EIN

The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.

Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that OH laws require.

To apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.

Assign a Registered Agent for your LLC in Ohio

There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.

But did you know that all businesses are required by law to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office, that would be your street address or P.O. box.

As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in. In Ohio, this is called a Statutory Agent.

A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC in OH.

Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:

  • Limit third party access to your personal information
  • Ensure that you never miss important documents
  • Protect the privacy of owners
  • Eliminate junk mail
  • Ensure you’re never served with legal papers in front of your clients
  • And more!

Setting up a Registered Agent Service

You are required to appoint and maintain a registered agent for your Ohio LLC. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. 

A registered agent may be an individual who resides in Ohio, or a domestic or foreign business entity authorized to do business in Ohio. The registered agent must have a physical street address in Ohio.

Open a Business Bank Account for Your LLC in Ohio

To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.

Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the state of Ohio, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.

Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.

Types of Business Bank Accounts

Not all business bank accounts are created equal. That’s why it’s important to distinguish between the good, the bad, and the best business bank accounts.

Checking Accounts

A business checking is the most common type of business bank account and the first one you’ll want to open for your business. This because business check accounts allow you to: 

  • Accept deposits (over-the-counter cash, checks, credit card, and electronic deposits). 
  • Pay for business-related expenditures (payroll, taxes, business insurance, vendors, lenders, and everything imaginable that you’ll need to operate your business). 
  • Keep detailed records of all expenses and income.
  • Protect your money. This account is Federal Deposit Insurance Corporation (FDIC) insured, meaning you’re covered up to $250,000 by the federal government should anything happen to the bank or your money.
  • Support dual signatures. If you have a partnership or employees, you may wish to make it required that two signatures be present whenever a withdrawal or deposit is made.

Savings Accounts

This one should come as no surprise. A business savings account (like a personal savings accounts) lets you safely save money in a bank.  You don’t need this right away though, only when you have an abundance of capital sitting in your business checking account, will you need to open a savings account. It allows you to: 

  • Make saving money a habit. The most successful companies (think blue chips like Wal-Mart, Amazon, General Mills, Hershey’s, and General Electric) all have solid reserves of capital.
  • Protect your business during a cash-crunch. Incidentally, 80% of businesses fail because of cash flow problems.
  • Save money so that you don’t have to take out expensive business loans.
  • Maintain liquidity. With a business savings account, you can liquidate assets to buy equipment, purchase real estate, and make other big purchases for your business. 
  • Build business credit. Yes, having a business savings account can actually help you establish and build business credit.

Business Certificate of Deposits

A business certificate of deposit (CD) is a term account that offers maximum security and a guaranteed rate of return. You agree to lend your business’s money to the bank for a set period of time at an agreed-upon interest rate. The interest rates are usually higher than you’d receive from a business savings account or interest-bearing business checking account. 

Here are the main features of a business certificate of deposit:

  • It pays out 1% or more in interest. Some CDs pay over 2% in interest
  • You cannot liquidate the account until the term expires. This means you can’t spend the money. 
  • The longer the term, the higher the interest rate.
  • Different banks offer different term limits. Some CD terms are for a week, months, or even years.

Money Market Accounts

This is a lesser-known type of business a bank account and isn’t for every business owner. You’ll want this type of account if you have a lot of money saved, want higher interest rates than a business savings account or interest-bearing business checking account, but still want some access to your money.

Here are the main features of a business money market account:

  • Six withdrawals per month. 
  • Deposit money anytime.
  • Deposit as much money as you like.
  • Higher interest rates (currently between .1% and 1.6% APY)
  • Require a minimum balance.
  • Penalties if you withdraw more than six times in a month. Ask your banker what the penalty is if you withdraw more than six times.

How to Open a Business Bank Account

Opening a business bank account is as simple as gathering some information together and completing an application. Here are the steps to open a business checking account:

1.    Do your due diligence. Research different banks and discover what each one offers. Then decide which one will work best for your business type. An easy way to do this research is to check out some of our business bank reviews.

2.    Get a tax ID number. You can get one free EIN from the IRS. If you think you already have one, here’s how to look up an EIN.

3.    Gather your business formation documents (for LLCs and Corporations).

4.    Gather your business license or business name filing paperwork.

5.    Call the bank and find out what other items you’ll need to open a business bank account. Every bank has different requirements, so make sure you check with them first before attempting to open a business bank account. Sometimes this information will be listed on the bank’s website.

6.    Go in person or online to complete all necessary paperwork and submit your business documents.

At Inc Authority, we make getting a business bank account easy. How so? Well, when you form your business with us, you gain access to a free Bank of America business checking account. So, don’t wait! Form your LLC in OH today!

Business Tax and Regulatory Requirements

Depending on the type of business you run, you may be required to register for one or more forms of state tax.

Sales Tax

If you are selling a physical product, you’ll typically need to register for a seller’s permit online through the Ohio Department of Treasury website.

Employer Taxes

If you plan on hiring employees in Ohio, your business needs to register for Unemployment Insurance Tax. This would be through the Ohio Unemployment Insurance Agency. You will also need to sign up for Employee Withholding Tax through the Michigan Department of Treasury. If you don’t plan t hire employees, you’ll be exempt from this tax.

Commercial Activity Tax

In Ohio, LLCs with gross receipts exceeding $150,000 per year are required to pay a commercial activity tax. LLCs with less than $150,000 in gross receipts are exempt from this tax.

Federal Tax Filing Requirements

Most LLCs will need to report their income to the IRS each year using:

Getting Started Your LLC in Ohio

Forming a professional LLC or corporation in Ohio is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?

We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business. We can also advise you on the things you need to pay, such as LLC cost, OH state fees, and other payables.

Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. Please contact us or visit our website today to get started!

Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.