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As a prospective small business owner, you must determine which type of business you want to create. S corps and C corps muddy the waters by throwing shareholders and investors into the mix, and sole proprietorships open you up to personal liability issues. Your best bet as an Ohio entrepreneur is to file for an LLC.
Benefit from unique tax advantages and safeguard your assets when you establish an LLC.
A limited liability company (LLC) is a formal business entity that allows you to protect your assets while giving you complete control over the business.
If you’re filing for an in-state Ohio LLC, you must complete a form known as the Articles of Organization per state law.
All Ohio LLCs must elect a registered agent per state law.
The Ohio Secretary of State’s website describes a limited liability company as a business entity that combines elements of a corporation with aspects of a sole proprietorship or partnership. As such, LLC formation is a good choice for those who want flexibility and those who need liability protection to prevent their business affairs from affecting their assets.
You have limited liability with an LLC. This doesn’t necessarily mean that you hold no personal liability for what the business does. As its owner, you may face personal penalties if the company is involved in wrongdoing. However, this business structure allows you to protect your assets in these events.
For example, imagine that you get sued by an unhappy customer. If you have a sole proprietorship and lose the lawsuit, you may have to use your assets to pay the judgment. That’s not the case with an LLC because a claimant can only claim against the company’s assets.
There are many reasons to choose an LLC as your business entity, including the following:
Less paperwork to handle than you would with an S corp or C corp
No need for extensive recordkeeping
No double taxation
No need to involve shareholders
Annual filing fee for an Ohio LLC is just $50
Relatively low sales and use tax rate of 5.75%
Don’t have to follow a fixed management structure
Forming an LLC is beneficial to most types of business owners.
An LLC is vital to limit legal liability if you have a partnership or sole proprietorship. Without an LLC, a disgruntled customer or employee can pursue you individually, in addition to or instead of pursuing the business.
You may also choose an LLC for tax purposes. For example, those who don’t wish to pay both personal income and corporation taxes are better served with an LLC than an S or C corp.
Those who want flexibility in running their business should also consider an LLC. You can have whatever ownership and managerial structure you want rather than sticking to specific requirements as you do in a corporation
We can distill the main reasons for forming an LLC into the following:
Less personal liability for business issues
Tax benefits, especially when compared to the corporate structure
The flexibility to run your business your way
Each state has its own rules for creating your LLC. That means coming to grips with the specific filing requirements for Ohio if you wish to create an LLC in the state.
Wouldn’t it be nice to be able to choose a business name and start doing business? Unfortunately, the process isn’t quite that simple in Ohio. You have to check that your chosen business name doesn’t conflict with other companies operating in the state.
Furthermore, there are issues related to trademarking to consider. Plus, you may need to reserve your business name if you have a name but aren’t quite ready to start the company.
Let’s break down the critical stages of choosing a business name for your LLC.
Once you’ve come up with a proper name, you need to conduct a name search to see if any company in the state already uses the name you want. If it does, you’ll likely have to choose another moniker. Otherwise, you risk violating that company’s trademark, which creates legal issues for your budding business.
Thankfully, Ohio makes it easy to conduct a name search. The Ohio Secretary of State website operates a business search database that delivers the information you need. Type in the name of your proposed business, and the database tells you the following:
Whether other businesses exist in the state with the same or a similar name
The company’s status, with two potential outcomes:
The status of the company’s trademark on its name
If the company’s trademark is canceled, you could file a trademark for it yourself.
Furthermore, you must follow Ohio’s guidelines for proper naming. Failure to do so could lead to a rejection of your chosen name. These guidelines include the following:
The name must include one of the following phrases:
Limited Liability Company
The name can’t contain profanity or any slurs related to religion, heredity, gender, or ethnic grouping
You can’t use the term “cooperative,” or any similar term unless you register your LLC as a cooperative
The name can’t imply affiliation with any government agency
You can’t use any of the following words without approval from a financial institution’s superintendent:
Just because your name isn’t used in Ohio doesn’t mean it’s not used elsewhere. You also need to check that nobody uses the name on the web or, at the very least, that you can purchase a domain name using your chosen business name.
There are several reasons to conduct a domain name check:
Ensure you can buy a relevant website domain name for your business
Register the domain in advance, ensuring no one else can register it
Have a domain that’s consistent with your name for use in branding
It’s easy to check if a website is using your business name. Type “yourbusinessname.com” into your browser. If a website pops up, you know somebody is using the domain. If a message stating that the domain doesn’t exist or is for sale appears, you can purchase the domain for your business.
You want to protect your business name as quickly as possible. Registering the name with the Ohio Secretary of State does this, as we’ll cover in a moment. But it would be best to create trademarks for any names associated with your business.
You can use the Secretary of State’s Filing Form Cover Letter to file for a trademark. Filing fees vary from $125 up to $300 for expedited service. You must provide the name of the applicant, your business address, and a description of the name or mark you wish to trademark.
There are several things you need to trademark when forming your LLC, including:
Your company’s full LLC name
Any logos or similar images you use in your branding
The name you’re doing business as if it’s not the same as your company’s LLC name
The last of these is worth additional attention. Many companies prefer a “doing business as” (DBA) name instead of their LLC name.
For example, you may have a long winded LLC name, such as “Residential Property Experts Holding Company, LLC.” That doesn’t sound good on company branding. Instead, you wish to do business as “Residential Property Experts.”
The latter is your DBA name; you need to file a trademark for it as you would for your LLC name. As a side note, Ohio doesn’t use the term DBA officially. Instead, it uses the term “fictitious name.” The two terms mean the same thing.
With your checks completed, your last step is registering your business name. You do this via your Articles of Organization, which we cover in step 2.
However, reserve the name before starting your business by completing the state’s Name Reservation/Transfer/Cancellation form.
As the form’s name implies, you can use this document to transfer a name to your ownership or cancel your ownership of a business name. But for reservation purposes, you use it to claim temporary ownership of a business name.
Ohio grants you 180 days to start your LLC once you reserve a name. You also won’t need this form if you intend to start your LLC immediately.
In the previous step, we mentioned Articles of Organization for registering your business name. But these forms are for far more than that. You must file Articles of Organization and a filing fee to ensure your business can operate legally in Ohio.
First things first, you need the appropriate forms. There are two options when you file forms to start an LLC in Ohio:
Articles of Organization for a Domestic Limited Liability Company
Registration of a Foreign Limited Liability Company
Which of these forms you must complete depends on where you’re based. If your company headquarters is in Ohio, you need the first form. But if you’re based outside Ohio, you have a foreign LLC. As a result, you need the second form.
A foreign LLC is an existing LLC based outside Ohio wishing to do business there. For example, you may have a retail chain in Florida under an LLC formed in that state. To expand into Ohio, you must complete the Registration of Foreign Limited Liability Company to be in good standing with the state.
Regardless of the form you complete, you must provide the following information:
The name of your business
Its effective date of formation, which is essentially its starting date
Details about your statutory agent, which we discuss in Step 3
The LLC’s period of existence, assuming it isn’t a brand-new company
You must also provide a signature authorized by at least one person within your LLC. You can also use a business entity for this authorization.
You have two options for filing your Articles of Organization.
First, you can file online at ohio.gov. This option requires creating an account on the Ohio Secretary of State website. Once created, you can use the account to file your forms with the below steps:
Open the user landing page and select “File a New Business or Register Name”
Select “Limited Liability Company (Ohio) from the dropdown menu
Click and complete the appropriate form for your type of LLC
Submit your form
Alternatively, you can complete the form physically and mail it to the following address:
PO Box 670
If you pay an extra filing fee for expedited filing, send your form to the following address:
PO Box 1390
The Secretary of State processes your forms in three to seven business days. Expediting this can cut your wait time down to a day or two. However, you pay additional state fees for the privilege.
Speaking of state fees, it costs $99 to file your Articles of Organization. That fee is consistent regardless of whether you file online or offline. Expediting the form may raise this fee to $300..
Ohio requires all LLCs to maintain a statutory agent. This agent, typically called a registered agent elsewhere, receives critical legal documents on your company’s behalf. For example, a statutory agent receives any service of process documents related to lawsuits, processes them, and forwards them to your business.
Your Ohio statutory agent can be an individual or a business entity in Ohio. In the latter case, the business must have the authority to do business in Ohio. You can also serve as your own statutory agent if you’re over 18.
The following are a statutory agent’s core responsibilities:
Receive legal documents and communication from the Ohio Secretary of State on your LLC’s behalf
Maintain a physical street address that’s open during regular business hours
Process documents and ensure they reach you promptly
We mentioned that you could serve as your own statutory agent. This has several benefits, including lowering your costs and having complete control over where you receive legal documents.
Still, it isn’t recommended.
Serving as your own agent creates several privacy concerns, in addition to adding work to your busy schedule. Thankfully, many third-party agent services offer the following benefits:
Maintaining a regular street address operating under normal business hours
Freedom to change addresses without worrying about your agent’s status
Additional privacy as you don’t need to put your address in the public record
At Swyft Filings, our statutory agent service ensures Ohio LLCs have access to the expertise they need. We offer a secure and reliable service that ensures total compliance with state regulations. You also get access to an online dashboard that shows you what documents you’ve received and allows you to view those documents at your leisure.
Ohio doesn’t require you to create an LLC Operating Agreement. However, it’s recommended to have a written operating agreement for your records.
So, what is it?
Your operating agreement denotes your LLC’s procedures and operational framework. In a multi-member LLC, it serves as a contract that binds them to terms related to their ownership percentage and responsibilities within the business entity.
Without an operating agreement, business owners leave their LLCs open to internal disputes that they can’t resolve by pointing to a contract.
What if you have a single-member LLC?
While it may feel like you have a sole proprietorship when you have a single-member LLC, that’s not the case. You have an LLC, a business that could grow in size and complexity. As such, it’s still a good idea for single LLC owners to create an operating agreement with a forward-thinking focus that accounts for future challenges.
An excellent operating agreement should include the following:
Every LLC owner’s name
A statement saying that each person who signs agrees to abide by the contract’s terms
Information about the document’s purpose
Statements related to the LLC’s offices and statutory agent
The full address of each member
Statements related to each member’s ownership percentage and their responsibilities
You’re almost ready to start doing business. But before you do, you must register as an employer and secure a business license. Every Ohio business needs a license to sell or lease goods or services in the state. If you hire employees or intend to in the future, you need a federal Employer Identification Number (EIN).
Ohio calls its business licenses Ohio Vendor Licenses. Some also call it a seller’s permit. Regardless, you need to get one from the Ohio Department of Taxation in the following circumstances:
You engage in business in Ohio
You wish to sell tangible goods or services that are subject to sales tax by the Ohio Department of Taxation
There are two ways to obtain your license:
Apply online via the Ohio Business Gateway
Use an Ohio County Auditor to apply on your behalf
The license costs $25 per business location. You may also have to apply for special licenses or permits for certain types of businesses. A complete list is available on the State of Ohio website. Thankfully, you don’t have to worry about renewing your license once you have it.
You may also need to apply for a federal business license if your LLC conducts any activity that the federal government regulates. Examples include the following industries:
Mining or drilling
Television or radio broadcasting
Fish and wildlife
Transportation and logistics
Firearms and related paraphernalia
The Internal Revenue Service (IRS) requires all LLCs that hire employees to have an EIN. You’ll use this number on your company tax returns so you can pay federal taxes and employment taxes.
An Ohio business owner can apply for their EIN online at the IRS website. Upon completing the application, you receive a confirmation notice and then have to wait for the IRS’s response.
You’ll need the following information for your application:
Your legal business name
A trade name, if one applies
Your full legal name
The mailing and street addresses for your business
The Social Security number of the responsible party, which is usually the business owner
Information about the number of members your LLC has
Your business start date
The company’s primary activities
The maximum number of employees you intend to hire in the next 12 months
Your LLC uses its EIN for several purposes, including:
Opening financial accounts, such as a business bank account or credit card
Tracking company invoices to ensure you can collect bills, pay debts, and pay relevant commercial activity tax
Paying other taxes that may apply to your employees, including income tax, federal tax, and some state taxes
Are you a budding entrepreneur preparing to open a small business in Ohio? Perhaps you’ve already handled LLC formation in another state, but now you need help to form your Ohio LLC. Whatever the case may be, Swyft Filings is here to help.
We’ve helped over 250,000 businesses with their formation documents since 2015. At Swyft Filings, we provide personalized service that makes LLC formation simple. Tell us about your business, and we will file the paperwork and send all relevant documents back to you.
With fast turnarounds and a team of experienced experts, Swyft Filings ensures your small business handles LLC formation correctly. Contact our team today to learn how we can help you.
Tax advantages: Enjoy pass-through taxation for your business
Operational flexibility: Choose a management structure that fits your specific needs
Asset protection: Separate personal and business finances, safeguarding your personal assets
It costs $99 to submit your Articles of Organization and $25 per business location for your business licenses.
An Ohio LLC and LLC business owner pays the following taxes:
Federal self-employment income tax
State-level company and income taxes
You don’t have to submit annual or compliance reports when you have an LLC in Ohio.
The benefits of having an Ohio LLC include personal liability protection and greater flexibility in conducting business.
You must complete a Certificate of Dissolution of Limited Liability Company or Cancellation of Foreign LLC form and send it to the Ohio Secretary of State.
Ohio Secretary of State. “Start a Limited Liability Company in Ohio.” Accessed January 23, 2023.
Ohio Secretary of State. “Filing Forms and Fee Schedule.” Accessed January 23, 2023.
Ohio Department of Taxation. “Sales & Use Tax.” Accessed January 23, 2023
Ohio Secretary of State. “Business Search.” Accessed January 23, 2023
Ohio Secretary of State. “Trademark and Service Mark Application.” Accessed January 23, 2023
Ohio Secretary of State. “Name Reservation/Transfer/Cancellation.” Accessed January 23, 2023
Ohio Secretary of State. “Articles of Organization for a Domestic Limited Liability Company.” Accessed January 23, 2023
Ohio Secretary of State. “Registration of a Foreign Limited Liability Company.” Accessed January 23, 2023
Ohio Secretary of State. “Frequently Asked Questions.” Accessed January 24, 2023.
Ohio Business Gateway. “Register for a Vendor’s License or Seller’s Use Tax Account.” Accessed January 24, 2023.
State of Ohio Website. “Licenses & Permits.” Accessed January 24, 2023.
IRS. “Apply for an Employer Identification Number (EIN) Online.” Accessed January 24, 2023.
No matter the business type, Swyft Filings can help you form your new company.