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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
The process of forming an LLC in Ohio is streamlined and lacking in unusual requirements. Entrepreneurs starting a business in the state shouldn’t face many difficulties. Another business-friendly aspect of forming an LLC in Ohio is the fact that the state doesn’t require limited liability companies to file annual reports.
To avoid a misstep in the filing process, follow these steps to start an LLC in Ohio, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Ohio step-by-step
1. Select a name for your Ohio LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of Ohio:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Ohio Secretary of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “limited”, “ltd.”, “LLC”, or “L.L.C.”
Check the availability of your LLC name
To make sure that your chosen business name is free to use in Ohio, perform a search with the Ohio Secretary of State Business Search.
Reserve your LLC name with the Secretary of State
After selecting a name for your LLC, you can reserve it with the Ohio Secretary of State to prevent another business from registering with it before you legally organize in the state.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Ohio requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Ohio OR if the individual or business is based out-of-state, they must have a business office in Ohio.
3. File Articles of Organization
An LLC is formed in Ohio through the filing of Articles of Organization for a Limited Liability Company with the Ohio Secretary of State.
You can file the articles online or by mail. The filing fee is $99.
The Articles of Organization must provide the following information:
- LLC’s name, principal office address, email address, and phone number
- LLC’s purpose (type of business)
- Articles of Organization effective date
- Whether the LLC is perpetual or will end at a set date
- Registered agent name, address, and signature
- Name, address, and signature of an LLC member, manager, or legal representative
Foreign LLC registration
An LLC formed in another state that plans to do business in Ohio must register with the Ohio Secretary of State.
Follow these steps to do business in Ohio as a foreign LLC:
- Follow Ohio LLC naming guidelines and confirm that your LLC’s name is available for use in the states with the Ohio Secretary of State Business Search.
- Appoint an Ohio registered agent.
- File a Registration of a Foreign Limited Liability Company with the Ohio Secretary of State. The application can be filed online or by mail. The filing fee is $99.
- The application must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from the LLC’s home state that is dated fewer than 60 days prior to its filing with the Ohio Secretary of State.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Ohio, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Ohio LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Register with the Ohio Department of Taxation
Certain LLCs active in Ohio must register with the Ohio Department of Taxation in order to fulfill state tax obligations. This includes LLCs that collect sales tax on retail items and services and LLCs that have employees.
You can register to pay most state taxes online using the Ohio Business Gateway, although there may be cases where a form must be mailed into the DOT.
Obtain business licenses and permits
LLCs active in Ohio may be required to obtain one or more state or local business licenses, permits, or certifications depending on its type of business and location
Use the Ohio.gov Start a Business website to determine which state licenses are required for your LLC to operate and follow the links to apply for them. For local business licensing regulations, contact a city or county clerk in the area where your LLC is located.
Ohio LLC checklist
An Ohio LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Ohio Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “limited”, “ltd.”, “LLC”, or “L.L.C.”
Formational documents and filing fees:
- Name Reservation – $39 filing fee (optional, but reccommended)
- Articles of Organization for a Limited Liability Company – $99 filing fee
- Registration of a Foreign Limited Liability Company – $99 filing fee (foreign LLCs, only)
- An LLC is formed in Ohio through the filing of Articles of Organization for a Limited Liability Company with the Ohio Secretary of State.
Additional legal obligations:
- Register with the Ohio Department of Taxation – Required for certain Ohio LLCs, including those with employees and those that collect sales tax on goods and services
- Obtain business licenses and permits – Required for certain Ohio LLCs depending on business type and location