Starting a new business can be an exciting time. While the process may seem overwhelming at first, you can simplify everything by taking each step one at a time.
This guide contains all of the information you need to know on how to start an LLC in Ohio, from choosing a name and filing your articles of organization to recording your LLC formation documents with the state and finalizing your operating agreement.
Ohio LLCs are not required to have any particular organizational structure, so you can structure your LLC in any way that makes sense for your business.
However, you must follow certain steps when forming your LLC and reporting information to the state. You need to complete a series of additional legal documents that formalize the agreement among you, your members, and the state of Ohio.
Steps to Start an LLC in Ohio
1. Decide a name for your business
In Ohio, you need to follow some processes before choosing any name. To make sure you don’t run into any problems with a potential business name, you should do a search on the Secretary of State’s website. The search will let you know if the name is available and, if not, will explain why it is not.
Additionally, the state will not allow names that have government agencies or other prohibited words like Bank, University, Attorney, etc. Finally, before reserving your business name, it is recommended that you check to see if the domain name is available. This will make it much easier for customers and other businesses to find you on the Internet.
2. Choose a statutory agent to act on behalf of your business
You need to choose a statutory agent before you can file the LLC operating agreement and transaction documents with the Secretary of State. A statutory agent is an Ohio-licensed attorney who serves as your business’s representative in all legal affairs.
This person will be your contact for things like filing your LLC paperwork with the state or dealing with queries from people outside the business. As such, you should choose someone whose home address is in Ohio and who lives in the same county as your LLC’s principal place of business.
3. Confirm if you need a business license
Ohio requires businesses that sell certain goods and services to get a vendor’s license from the Ohio Department of Taxation. The only time you absolutely have to have a vendor’s license is if your business sells the tangible personal property or taxable services. This means items that you can hold in your hand and services that are performed by human beings.
However, the state most businesses apply for a business license in their county where they will carry on their business. The license is a good idea because it allows the board to keep an eye on the industry, particularly if the industry has been given special license conditions.
4. File your Articles of Organization with the Secretary of State
You are now ready to officially start your Ohio business by registering your LLC as a legal entity with the Secretary of State. To do this, you need to file a document called Articles of Organization or Certificate of Formation for an LLC with the state.
The Articles of Organization form includes information about your business, such as your name, address, and other information about your LLC members. The form also states the date you filed the articles of organization and the date your LLC will be considered current under Ohio law.
The state will issue you a certificate of formation to show that your LLC formally exists after the documents are approved and filed properly. You will need the certificate to obtain EIN, licenses, and open a bank account.
5. Create your LLC Operating Agreement
Every Ohio LLC must have an operating agreement. The operating agreement not only must be signed by all members but it must be recorded in the office of the county recorder where you do business. You should create a written operating agreement as soon as possible after your business is authorized.
This agreement sets out how your LLC is run and regulates matters like equity management and member qualification. It also makes sure that business agreements between your members are fair to all involved, including yourself as an owner or member.
6. Get an Employer Identification Number (EIN) from the IRS
Federal law requires any business entity that engages in income-generating activities to have a separate tax identification number known as an Employer Identification Number or EIN. This includes Ohio LLCs. The IRS issues these numbers and the EIN is used to identify a business for tax purposes.
After you receive your EIN, you will need to enter it in the appropriate place on the Articles of Organization and your operating agreement, as well as other tax-related documents. You will also need this number to sign contracts, open bank accounts, and pay or report taxes.
While Ohio is a very business-friendly state, it is important to understand the steps needed to start an LLC in Ohio. By knowing how to legally form your Ohio LLC, you can be sure that you will have everything in place for a smooth start and incorporation.
New businesses in Ohio should also be aware of some of the state’s general business tax rules, as well as its special rules for LLCs. With these things in mind, anyone who is interested in starting a business can develop a solid plan to help their new venture succeed.