Before registering, it is important that you understand what exactly an Ohio LLC entails and how much work has to go into setting up one. An LLC is a business entity that is less complicated to set up and easier to maintain compared to corporations.
Since I’ve been in the business industry for a decade, I counseled countless clients and helped them establish their LLC.
After consulting with experts in Ohio, I’ll provide you a complete guide on how to start a limited liability company in Ohio.
Quick Summary:
- To start an LLC in Ohio, you must register an available business name, appoint a statutory agent, file the articles of organization and create an operating agreement.
- Obtain an EIN and business license after registering your limited liability company.
- An Ohio LLC offers limited liability, single taxation and a flexible management structure.
How To Start an LLC in Ohio
To start an LLC in Ohio, you need to follow state requirements and file all legal paperwork.
1. Find a Name for Your Ohio LLC
One of the first steps in setting up your Ohio LLC is figuring out what to call it. You will need a name that is available, meets state requirements, and doesn't infringe on any trademarks or copyright laws.
The best way to find an appropriate LLC name for your new business is to brainstorm keywords about your brand and then pick one that makes sense for your company.
Once you have your LLC name, you will need to ensure that it meets the state requirements. You can find these on the Secretary of State's website, and they are as follows:
- The business name cannot be the same as another name reserved by an existing Ohio LLC or a similar sounding company registered with the state.
- The name must contain the terms “Limited Liability Company,” “LLC,” “ltd” or “L.L.C.” [1]
- It cannot contain misleading words, such as "corporation," "incorporated," or any other words which give the impression that it is a corporation.
- You cannot use the word “bank,” “trust” or “insurance” in the business name.
- Additional paperwork and licenses are required if you include professional terms in the LLC’s names.
You can also reserve your company name by filing a reservation form with the Ohio Secretary of State. You can file it online at a $39 filing fee.
Read More: Looking Up an LLC in Ohio
2. Appoint an Ohio Statutory Agent
After you have your name, the next step in registering for an Ohio LLC is appointing a statutory agent.
An LLC statutory agent is equivalent to a registered agent in other US states. An Ohio registered agent service is a company or a person who accepts legal documents on behalf of the LLC. Basically, the main function is to provide service of process for your company.
The State of Ohio has specific requirements and guidelines you need to follow when selecting a registered agent:
- Must be a person who is at least 18 years old with permanent residence or citizenship in the US
- Must not be a member of another Ohio LLC
- Cannot have been convicted of crimes involving moral turpitude or dishonesty, fraud, theft, embezzlement, forgery, and other related offenses.
When selecting your registered agent service, you should consider several things, such as whether they will act in person or by proxy as a statutory agent.
Also, the statutory agent must be a resident of Ohio or has permanent US citizenship with at least one year residence in OH and cannot have resided outside of the state for more than six months continuously.
3. File LLC Articles of Organization
LLC articles of organization is an important document that needs to be filed for the state of Ohio to recognize your LLC business structure.
The document is created by an attorney or a professional who specializes in these types of documents. The articles of organization will include information about how you want the company run, members involved, names and titles, etc.
Filing Ohio LLC articles of organization with the Ohio Secretary of State's office can be done online or by mail at a $99 filing fee.
Here are some of the information that should go into your articles of the organization before submitting it to the Ohio Secretary of State:
- Business name
- Physical address
- Members
- Registered agent
- Nature and purpose of the business
- Termination or completion date if it is applicable
4. Make an LLC Operating Agreement
An Ohio LLC operating agreement is a contract that sets out the basic terms and conditions of ownership in your LLC in Ohio.
It can also help you avoid disputes among LLC owners, and keep things simple if one member leaves the company, dies, etc.
The operating agreement document should include:
- How you want to run your LLC (e.g., how many members will have an equal say in company decisions or if one person has a controlling interest)
- How much capital each member contributes and how profits are distributed
- How do you want shares distributed (e.g., if there are multiple members, how do they divide up membership interest)
- How decisions will be made and what happens in case of a disagreement between members.
- How to run meetings (e.g., does majority vote rule or consensus)
- How to manage finances and decide on investment decisions. For example, should members be allowed to withdraw funds, or can the LLC make loans to them?
- How to hire employees
All members of the LLC should sign operating agreements for it to take effect.
Please note that an operating agreement is an internal document that is not required by Ohio law, but it is a very good idea to have one, especially if the company has multiple members.
5. Obtain an EIN
An employer identification number (EIN) is a tax number assigned to a business entity.
It's an important thing to have for your company because it acts as proof of identification and gives the Ohio Secretary of State permission to use its Social Security Number (SSN).
You will need this information if you plan on filing any taxes in Ohio or want to open a business bank account. It also applies to commercial activity tax.
To get an EIN, you must fill out the SS-4 form and submit it with the following information:
- Your name
- Business address
- Location of the main office or home office if different from above
- Type of entity such as LLC partnership corporation, S corporation or C corporation, sole proprietorship, etc.
You can file your form by mail or fax it to the Internal Revenue Service (IRS) for free.
To get your EIN, you will need an SSN, a mailing address, and the name of your business.
Be sure to include your company's legal name on the form in order for it to be recognized by the IRS, as well as your EIN number if you have one.
You can apply online through the IRS website or apply by mail.
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6. Obtain Business Licenses
If you want to provide professional or personal services in Ohio as LLC owners, you must obtain a business license and register your professional limited liability company.
Many types of licenses depend on the type of service being offered, such as:
- A contractor's license for contractors and subcontractors who work with building trades like plumbers, electricians, carpenters, etc.
- An individual practitioner's certificate is required if you are a doctor or other health care professional and want to offer your services in the state of Ohio.
Licensing requirements vary from county to county, so be sure you research and understand the type of license your Ohio LLC needs before applying for it.
If you operate as an LLC that is ordering taxable items, you have to remember to apply for a sales tax license with the Ohio Department of Taxes online.
Or, you can obtain help by having a service provider like ZenBusiness set up the firm on your behalf.
FAQs
How Do I Start a Single-Member LLC in Ohio?
To start a single-member LLC in Ohio, you need to file the articles of organization with the Ohio Secretary of State. You will need to provide the official name of your new LLC, the statutory agent's information, and a few more basic details.
What Are the Benefits of an LLC in Ohio?
The benefits of an LLC in Ohio include limited personal liability and pass-through taxation.
LLCs in Ohio have fewer reporting and recordkeeping requirements than corporations, and most importantly, they don't have to pay an annual report or fee in Ohio.
How Do I Add an Owner to My LLC in Ohio?
To add an owner to your LLC in Ohio, you need to file the "Domestic Limited Liability Company Certificate of Amendment or Restatement" and pay the corresponding fee of $50.
What Does LLC Non-ohio Mean?
LLC Non-Ohio means that the LLC is registered outside the state of Ohio. In other words, a non-Ohio LLC is the same as a foreign LLC.
Does a Foreign LLC Have to Register in Ohio?
A foreign LLC has to register in Ohio.
Registering for an Ohio LLC is fast and simple. To do it, you can submit your application either online or by postal mail; the filing fee is $99.
Can a Minor Own an LLC in Ohio?
A minor can own an LLC in Ohio as long as the company is represented by a parent, guardian or legal agent.
How Often Do I Have to Renew My LLC in Ohio?
You don't have to renew your Ohio LLC once you have it registered. Unlike most states, you don't have to file annual reports after your LLC formation.
Is Ohio a Good State for LLCs?
Ohio is a good state for LLCs because it offers limited liability protection, fewer reporting, and recordkeeping requirements than corporations, plus their fees are much lower. You can also avoid double taxation and reap numerous tax benefits.
Starting an LLC in Ohio
Starting an LLC in Ohio could be accomplished if you follow the steps outlined above. Remember to prepare and file all legal documents for your business entity to be approved.
To streamline the process, you can employ an online service provider like ZenBusiness. The company will guide your business and help you stay compliant with state requirements.
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ZenBusiness
References:
- https://www.ohiosos.gov/globalassets/publications/busserv/llc.pdf
What are the Benefits of Forming an Ohio LLC?
The benefits of forming an Ohio LLC include limited liability protection, single tax payment and flexible management structure. These are reasons why it is the preferred company structure for entrepreneurs and small business owners.
The advantages of starting an LLC include the following:
1. Limited liability protection
The personal assets of the members of a limited liability company are deemed separate from the company’s finances and obligations.
In essence, any debts or losses the company may incur will be compensated and settled through the LLCs assets in the form of available capital, investments or properties.
The personal assets of the individual members are protected from banks, debtors, lending institutions and client demands. The only loss of the LLC owners are limited to the capital they invested into the company.
2. Pass through Taxation
Limited liability companies benefit considerably from pass-through taxation. The company itself is not subject to corporate taxes. Instead, the profits are computed and taxed based on the individual returns of the LLC’s members.
Unlike corporations, limited liability companies do not have to shoulder double taxation, that is, levies on both the corporate as well as the individual level.
3. Management Flexibility
The management structure of a limited liability company may be handled collectively by the owners, a single member, or assigned to an entity not affiliated with the business.
The members of the company may employ the services of a professional management agency to oversee the operations of the LLC. This would ensure that the LLC remains legally compliant with the requirements of the state.
