How to File an LLC: Ohio

As a prospective small business owner, you must determine which type of business you want to create. You could create an S Corp or C Corp, though neither is a great choice if you don’t want to invite shareholders and investors into the mix. Your new business could be a sole proprietorship, which opens you up to personal liability issues if anything goes wrong.

A limited liability company (LLC) is a good middle ground. This type of business allows you to protect your assets while giving you full control over the business.

However, before setting up your LLC, you need to know where to start. It isn’t as simple as picking out a business name and starting to trade. Every Ohio business has to meet the state’s requirements to set up an LLC. Here, we explore those requirements so you understand what you need to do.

What is an LLC formation?

The Ohio Secretary of State website (1) 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 personal 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 business gets involved in any wrongdoing. However, this business structure allows you to protect your personal assets in these events.

For example, imagine that you get sued by an unhappy customer. If you have a sole proprietorship and you lose the lawsuit, you may have to use your personal assets to pay the judgment. That’s not the case with an LLC because a claimant can only claim against the company’s assets.

The benefits of an LLC

There are many reasons to choose an LLC as your business entity, including the following:

• You have less paperwork to handle than you would with an S Corp or C Corp. For example, you don’t have to pay as many state fees with an LLC as you would with a corporation.

• You don’t need to keep extensive records with an LLC. As long as you track ingoings and outgoings for tax purposes, you should be able to operate legally in Ohio.

• You’re only taxed once with an LLC. By contrast, C corporations get taxed at both the corporate and individual levels for contributions to shareholders.

• Speaking of shareholders, they’re not involved with an LLC. The business answers solely to its owner, which is you.

• In Ohio, the annual filing fee for an LLC is just $50 (2). Even if your business isn’t immediately successful, this low filing fee makes it easy to maintain LLC status.

• Sales tax is fairly low for Ohio LLCs. The state’s sales and use tax rate is currently 5.75% (3).

• You don’t have to follow a fixed management structure with an LLC. Again, control is key here. You get to set up your business however you see fit.

When should you form an LLC?

Forming an LLC is beneficial to most types of business owners.

If you have a partnership or sole proprietorship, an LLC is vital to limit your personal legal liability. 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 how they run their business should also consider an LLC. You can have whatever ownership and managerial structure you want rather than having to stick 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.

Step-by-step guide to starting your Ohio LLC

Each state has its own rules for creating your LLC. That means coming to grips with the specific filing requirements for the state of Ohio if you wish to create an LLC in the state. You have to pay a filing fee and complete specific forms as part of your business formation.

Here, we’ll break down the filing process for Ohio using step-by-step instructions that take you from choosing a name to getting your business licenses.

Step 1: Choose a business name for your LLC

Wouldn’t it be nice to be able to choose a trading 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 any other companies that operate 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 key stages of choosing a business name for your LLC.

Stage 1 — Discover if the name is in use

Once you’ve come up with a suitable name, you need to conduct a name search. This search lets you 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 (4) 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:

  • Active

  • Dead

• The status of the company’s trademark on its name

If the company has a canceled trademark on its name, you may be able to 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

  • LLC

  • Limited

  • Ltd

  • L.L.C.

• 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:

  • Bank

  • Banking

  • Banker

  • Trust

Stage 2 — Check internet domains

Just because your name isn’t in use in Ohio, that 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 exists that uses your business name. Type www.yourbusinessname.com into your web browser. If a website pops up, you know that 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.

Stage 3 — File for a trademark

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 you also need to create trademarks for any names associated with your business.

You can use the Secretary of State’s Filing Form Cover Letter (5) 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 to use a “doing business as” (DBA) name instead of their LLC name.

For example, you may have a longwinded LLC name, such as “Residential Property Experts Holding Company, LLC.” That’s a long-winded name that doesn’t sound good on company branding. Instead, you wish to trade as “Residential Property Experts.”

The latter is your DBA name, and 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.

Stage 4 — Register or reserve your name

With your checks completed, your last step is to register your business name. You do this via your Articles of Organization, which we cover in Step 2.

However, you may want to reserve the name in advance of starting your business. In that case, you need to complete the state’s Name Reservation/Transfer/Cancellation form (6).

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.

Step 2: Fill out Ohio Articles of Organization

We mentioned Articles of Organization for registering your business name in the previous step. But these forms are for far more than registering a name. You have to file Articles of Organization, along with a filing fee, to ensure your business can operate legally in the state of 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 (7)

• Registration of a Foreign Limited Liability Company (8)

Which of these forms you need to complete depends on where you’re based. If your company headquarters is in the state of 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 that’s based outside Ohio but wishes to do business in the state. For example, you may have a retail chain in Florida under an LLC formed in that state. If you want to expand into Ohio, you need to 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.

Sending your Articles of Organization and pricing

You have two options for filing your Articles of Organization.

First, you can file online at ohio.gov. This option requires you to create an account on the Ohio Secretary of State website. Once created, you can use the account to file your forms with the below steps:

1. Open the user landing page and select “File a New Business or Register Name.”

2. Select “Limited Liability Company (Ohio) from the dropdown menu.

3. Click and complete the appropriate form for your type of LLC.

4. Submit your form.

Alternatively, you can complete the form physically and mail it to the following address:

P.O Box 670

Columbus, OH

43216

If you pay an extra filing fee for expedited filing, send your form to the following address:

P.O Box 1390

Columbus, OH

43216

It takes between three and seven business states for the Secretary of State to process your forms. 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 up to $300.

Step 3: Hire an Ohio statutory agent

The state of Ohio requires all LLCs to maintain a statutory agent (9). This agent, who’s typically called a registered agent elsewhere, receives important 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 transact in Ohio. You can also serve as your own statutory agent as long as you’re over the age of 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 normal business hours.

  • Note that your statutory agent can’t use a P.O. box or mailing service to receive documents.

• Process documents and ensure they reach you in a timely manner.

Serving as your own agent vs. hiring a third-party agent

We mentioned that you could serve as your own statutory agent. There are several benefits to this, including lowering your costs and having full 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 my work to your busy schedule. Thankfully, there are many third-party agent services that offer the following benefits:

• A third-party agent maintains a regular street address operating under normal business hours.

• You have the freedom to change addresses without worrying about your agent’s status when you use a third party.

• You don’t have to operate under normal business hours when you have a third-party agent.

• As a statutory agent’s address has to be on the public record, working with a third party gives you an extra layer of privacy.

At Swyft Filings, our statutory agent service

e 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.

Step 4: Create an LLC operating agreement

Ohio state 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, which is a business that could grow if it achieves success. 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.

A good 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

Step 5: File for an Employer Identification Number and business licenses

You’re almost ready to start transacting. But before you do, you need to 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).

Getting a business license in Ohio

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 any sort of business in the state of 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. (10)

• Use an Ohio County Auditor to lodge the application 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 full list is available on the State of Ohio website (11). 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:

• Agriculture

• Aviation

• Mining or drilling

• Nuclear energy

• Television or radio broadcasting

• Fish and wildlife

• Transportation and logistics

• Alcohol

• Commercial fishing

• Firearms and related paraphernalia

Getting an EIN

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 (12). 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

• Hiring employees

• 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

Let us handle your LLC paperwork

Are you a budding entrepreneur who’s 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. Just 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 the right way. Get in touch with our team today to learn how we can help you.

FAQs

How much does it cost to set up an LLC in Ohio?

It costs $99 to submit your Articles of Organization and a further $25 per business location for your business licenses.

How is an LLC taxed in Ohio?

An Ohio LLC and LLC business owner pays the following taxes:

• Federal self-employment income tax

• State-level company and income taxes

• Sales tax

You don’t have to submit any annual reports or compliance reports when you have an LLC in Ohio.

What are the benefits of anOhio LLC?

The benefits of having an Ohio LLC include personal liability protection and greater flexibility in terms of how you conduct business.

How do you dissolve an LLC in Ohio?

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.

Bibliography

1. Ohio Secretary of State. “Start a Limited Liability Company in Ohio.” Accessed January 23, 2023.

2. Ohio Secretary of State. “Filing Forms and Fee Schedule.” Accessed January 23, 2023.

3. Ohio Department of Taxation. “Sales & Use Tax.” Accessed January 23, 2023.

4. Ohio Secretary of State. “Business Search.” Accessed January 23, 2023.

5. Ohio Secretary of State. “Trademark and Service Mark Application.” Accessed January 23, 2023.

6. Ohio Secretary of State. “Name Reservation/Transfer/Cancellation.” Accessed January 23, 2023.

7. Ohio Secretary of State. “Articles of Organization for a Domestic Limited Liability Company.” Accessed January 23, 2023.

8. Ohio Secretary of State. “Registration of a Foreign Limited Liability Company.” Accessed January 23, 2023.

9. Ohio Secretary of State. “Frequently Asked Questions.” Accessed January 24, 2023.

10. Ohio Business Gateway. “Register for a Vendor’s License or Seller’s Use Tax Account.” Accessed January 24, 2023.

11. State of Ohio Website. “Licenses & Permits.” Accessed January 24, 2023.

12. IRS. “Apply for an Employer Identification Number (EIN) Online.” Accessed January 24, 2023.