An LLC is a business structure that helps you protect your personal assets while increasing your flexibility when it comes time to pay taxes. Having this business setup can help you out in almost any state, and Ohio is no exception.
Starting an LLC in Ohio is simpler and more affordable than it is in a number of other states. There are minimal fees associated with the process, and the number of forms you need to file is also small. All of these factors, plus the natural benefits of an LLC in any state, make forming an LLC in Ohio a wise decision.
Even though creating an LLC in Ohio is simpler than in most states, that doesn’t mean it is without pitfalls. It’s always best to consult with trusted sources who can help you better understand what each form entails and how to complete the registration process efficiently.
To help you form an LLC, we’ve outlined the steps you’ll need to take when doing so in the State of Ohio:
Why Create an LLC in Ohio?
An LLC affords a variety of benefits and is easier to create than a corporation. For these reasons and others, LLCs remain a popular choice for entrepreneurs and small business owners. An LLC can also be formed around a single person, which helps with liability protection and tax flexibility. Finally, LLCs have few restrictions on the type of business they can do, though some professions require special licenses.
Now, why Ohio? That answer can vary. Maybe you live in Ohio already and it’s just convenient to create your company in your home state. Alternatively, an entity from another state may seek to do business in Ohio because of its large population. Whatever your reason, Ohio is an excellent place to start a business, and an LLC provides the flexibility and protection needed for a wide variety of businesses.
Choose a Name for Your Ohio LLC
The first thing you need to do when creating an LLC is choose a name. The name can be almost anything but does need to meet a few specific requirements:
- Must be unique: Your name cannot be the same as any existing company in Ohio. To check if your name has been chosen, use the Ohio business entity search tool on the Secretary of State website.
- Must include LLC: LLCs need to have the term “LLC” or another variant of it in their company name. Some acceptable alternatives include “limited,” “ltd.,” “limited liability company” or “LC.”
- Cannot include certain terms: Certain terms like “bank” or “trust” require special permissions. These names must be approved by the Ohio Department of Commerce’s Division of Financial Institutions in order to prevent companies from posing as banks, which must meet certain fiduciary requirements.
If you have a name in mind that fits all of these requirements, but you aren’t ready to proceed with the filing process, you can reserve the name for a time. You can either fill out Form 534B Form 534B or complete a name reservation request online. Both of these options cost $39 and will reserve the name for up to 180 days.
Having a Name Request Denied
If your LLC formation request is denied by the Secretary of State, they will hold your name for a year. They do this to allow you time to re-file your request and correct any errors without worry that your chosen name will be taken.
Using a Trade Name
When you do business, you don’t have to use the actual name of your LLC. In order to use an alternate trade name, you need to create a “DBA” or “doing business as” name. This allows the company to operate under the DBA name, while keeping the LLC name private. To do this, you need to register your DBA with the Secretary of State by filing a Name Registration form. You can file this online or by mail, and it costs $39.
Appoint a Statutory Agent
Every Ohio LLC needs an official point of contact for the government. This person is known as a statutory agent or registered agent. Registered agents accept legal papers on behalf of the LLC in the event of a lawsuit or any other legal action.
Any permanent resident in the state of Ohio can serve in this position, including yourself if you are a sole proprietor. You can also hire a corporation to be your registered agent. If you hire an out of state (aka foreign) company as your agent, they need to be authorized to do business in Ohio.
Another thing to keep in mind: any registered agent must be a resident of Ohio. The only instance where a P.O. box can suffice is for individual agents who wish to receive mail at a different location than their home.
Complete and File Articles of Organization
To create your LLC in Ohio, you need to file your Articles of Organization for a Domestic Limited Liability Company, better known as Articles of Organization. These are filed with the Ohio Secretary of State and cost $99 to file. They can be posted online or mailed to the Secretary of State’s office.
When filling out the form, you’ll need to provide the following information:
- Company name
- Any trade names under which the company will do business
- Name(s) and address(es) of trustee(s)
- Location of the principal office
- Name and address of the registered agent
- Term of the LLC
- Effective date of the article
- Signature of an LLC member, manager or representative
- Purpose of the LLC (optional)
Make an Operating Agreement
In Ohio, LLCs do not need to have an operating agreement in place. However, creating one goes a long way toward preventing future issues. An operating agreement is a document that lays out the duties and liabilities of each member of the LLC. It also dictates how the company operates and outlines processes for major shifts in the LLC.
Some common items included in an operating agreement are:
- LLC owner and member duties
- Member voting rights and vote powers
- Member financial obligations
- Meeting details
- Rules for LLC dissolution, sale or buyout
- Instructions for member removal
- Member ownership percentages
- What to do if a member dies
You can create an operating agreement with the help of a lawyer or look up an online form. This does not need to be filed at the same time as the Articles of Organization.
Get an EIN Follow Ohio Tax and Regulatory Requirements
Once you have formed your LLC, there are a few things that you need to be aware of before you start doing business: your EIN, business license and tax registration.
An EIN is a necessity if your company has more than one employee. Single-member LLCs can use the sole member’s Social Security number as the EIN, but it is advisable to file for an EIN anyway as that increases privacy. To receive an EIN, file an online EIN application with the IRS. It is free to file this form.
Business licenses aren’t needed for every type of business, but certain companies need to get local or state business licenses. You can check with the city clerk where your LLC is located to start the process of earning a local certificate. For state licenses, you’ll need to reference the Ohio.gov webpage on starting a business.
Any LLC that has employees or that sells goods and collects sales tax needs to register with the Ohio Department of Taxation. You can register online or via mail. There is also a Commercial Activity Tax in Ohio that applies to most businesses, even single-member LLCs.
Open a Business Banking Account
A key benefit of the LLC business structure comes from liability protection. In order to properly protect against liability, you need to keep your personal expenses and business expenses separate from one another.
To do this, create a business account. A business account comes with its own cards that can then be used to make business-specific purchases. The most important thing to keep in mind once you have a business account is to keep your purchases as separate as possible. This will be a key factor should your LLC ever be sued as it will protect your personal assets from any harm.
To open a business account, you need to provide a bank with your articles of organization, an EIN and a copy of your operating agreement (should you have them). As with anything, you can and should call the bank ahead of time to see if there are any additional items you need to provide or forms you should complete beforehand.
Notes on the Ohio Revised LLC Act
The Revised LLC Act of Ohio went into effect on 2/11/2022. This law impacts how LLCs are filed and how they are treated after filing. As an example, LLCs may be for-profit or nonprofit, and would have been designated as such in the past. Now, an LLC can be formed as either without additional designation.
This act also changed the requirement for having a registered agent. Now, a statutory agent must be retained at all times. If a company does not have one, the state will notify them that they have 30 days to find a new one. After receiving the warning, the company must update their agent information, or the Secretary of State’s office will cancel the business’s registration.
The Ohio Revised LLC Act also impacted management structure. It eliminated the distinction between member-managed and manager-managed LLC structures. Now, the way LLCs are structured is up to the operating agreement. Once updated, the operating agreement needs to be filed with a statement of authority (Form 613). Filing this form costs $50.
Finally, series formation was also introduced with this revised act. Now, you can form a series LLC, which is a multiple-company LLC that exists in a tiered structure. For example, if there are two separate companies, but one owns the other even though they each control their own assets, this could be turned into a series LLC.
Need Help Forming an LLC in Ohio
As simple as creating an LLC in Ohio may sound when you’re reading about it, it can often seem different when you start the process. If you have concerns about doing everything correctly or need some guidance to feel confident, we can help.
We’re able to provide you with all the information that you need to create an effective LLC structure that meets your needs. Whether you need help with filing documents, creating an operating agreement, determining the business license you need or something else entirely, we have the experience needed to help you reach your goals.
Click the button below to start your Ohio LLC now:
Should I start an LLC?
An LLC is a great option for first-time business owners. The nature of LLCs protects your personal assets from liability that impacts the company and allows you greater personal flexibility when it comes to your taxes. Unlike a corporation, an LLC is fairly easy and inexpensive to form, which makes it an ideal business structure for smaller companies. Whether or not you should start an LLC ultimately depends on what you need from a business structure, or whether you need one at all. However, if you want to start a business, an LLC is a reliable and simple option with numerous upsides.
How much does it cost to form an LLC in Ohio?
The minimum cost of forming an LLC in Ohio is $99. That is the cost of filing your Articles of Organization, which officially forms the LLC.
There are many other factors that can impact the total cost of forming your LLC. For example, hiring professional help with LLC formation, filing a name reservation form or creating a trade name would all add some cost to LLC formation. Additionally, you should consider the annual fees for filing routine paperwork for the government once your company is established. While not significant, these expenses are part of running an LLC.
Do I need an operating agreement for my Ohio LLC?
No. Ohio does not require LLCs to have an operating agreement in place. Still, we recommend creating an operating agreement. If you are a single-member LLC, it is less necessary, but could be useful in the event that you expand to hire employees. Multiple-member LLCs benefit most from an operating agreement. An operating agreement helps you avoid internal strife, streamline processes and outline steps needed to make changes to the LLC.
Can a foreign LLC do business in Ohio?
Yes, a foreign (i.e., out of state) LLC can do business in Ohio. Before they can do business, they need to register with the Ohio Secretary of State. In order to do this, they need to appoint a registered agent who either resides in the state of Ohio, is an Ohio-based company or is a licensed foreign company with a place of business in Ohio.
After appointing a registered agent, the foreign LLC needs to file a Registration of a Foreign Limited Liability Company either online or by mail, which costs $99.
When filing the application, it must be sent with a certificate of legal good standing from the foreign LLC’s home state.
A foreign LLC must also adhere to the unique name rule. If there are any companies in Ohio that share the same name, the LLC will either need to modify its name in Ohio or come to an agreement with the existing company.
Can I form a single-member LLC in Ohio?
Yes, you can form a single-member LLC in Ohio. Single-member LLCs help individuals separate business and personal expenses, improve liability protections and increase tax flexibility.
Can I form a professional LLC in Ohio?
Yes, you can form a professional LLC in Ohio. To do this, you need to form a specific type of LLC called a professional limited liability company (PLLC). You may need to form a PLLC if you intend to do work in any of the following industries:
To form one of these companies, you will need to obtain the relevant professional license from the State of Ohio, and then any members you add must also be licensed.
How do I dissolve my Ohio LLC when I'm done?
If you do not wish to maintain your LLC indefinitely, you can dissolve the company. The process for doing this can change depending on your operating agreement if you have one, so consult your operating agreement before proceeding with dissolution.
Once you are ready to dissolve the LLC, you need to file a certificate of dissolution with the Ohio Secretary of State. The certificate of dissolution needs to include the following information:
- Company name
- Ohio registration number
- Effective date of dissolution (must be on or before the filing date)
This certificate then needs to be signed by an authorized member of the LLC. It costs $50 to file this certificate and additional fees may apply if you wish to expedite the filing.
How can I add a DBA to my Ohio LLC?
To add a DBA name to your Ohio LLC, all you have to do is fill out a name registration form. It costs $39 to file this form. Keep in mind that like your LLC name, the DBA name must be unique. Search for unique names by performing a name search on the Ohio Secretary of State website.
Do you need to file annual reports for an LLC in Ohio?
No, LLCs do not need to file annual reports in Ohio. The only fees you might pay would be for associated licenses or if you choose to have your LLC taxed as a corporation. If you choose to be taxed as a corporation, you would need to pay the commercial activity tax.
Is a lawyer needed to start an LLC in Ohio?
It is not required to employ a lawyer to start an LLC in Ohio. That said, a lawyer can help answer important questions about business formation and guide you through the more obtuse steps of LLC setup before and after the company has been formed.
How can I change ownership of my LLC?
To change the owner of an LLC in Ohio, you need to fill out and file a Domestic Limited Liability Company Certificate of Amendment or Restatement form. It costs $50 to file this form. Depending on how the process was outlined in your operating agreement, changing LLC ownership may include additional steps.
Ready to form an LLC in Ohio? Call us at (307) 683-0983 to get started!