2022 Guide to Starting an LLC in Ohio

Last Updated on

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Ohio.  The LLC provides personal liability protection and has the potential to save money on taxes. With our step-by-step guide, you can learn how to form an LLC in Ohio without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Steps to Form an Ohio LLC

Let’s break down the steps to complete the Ohio LLC formation process.

Total Time: 10 minutes

Step 1: Choose a Name for the LLC

The first step in forming an Ohio Limited Liability Company is to make sure the name you want is available.  

It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Ohio. The Ohio Secretary of State makes it easy to search and verify if your LLC name is available.  Here is more information on how to do an Ohio LLC name search.

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
 If the name you want to use is considered similar to another, you can file for a Consent for Use of a Similar Name form and add the form as an attachment on a later page.
The name of the LLC must include one of the following words or abbreviations at the end of the business name:
Limited Liability Company
Limited
L.L.C.
LLC
Ltd
Ltd.

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Even if the name you select shows as being available, it isn’t final until the Secretary of State manually searches and approves it for your use.

If you plan to use a different name from the one that you register (perhaps you want to run multiple businesses under the LLC), you can use a trade name (sometimes referred to as a fictitious name, assumed name, DBA, or Doing Business As name).  To register a name, file the Trade Name Registration Application (Form 534A) along with a $39 filing fee to the Ohio Secretary of State.

If there is a name you want to register, but are not ready to file the LLC, you can file the Name Reservation form (Form 534B) and $39 filing fee to hold a name for up to 180 days.

Before settling on a name, you may want to see if a domain name is also available to match your business name and website address.

Step 2: Appoint an Ohio Statutory Agent

Every LLC in Ohio is required under the Ohio LLC Act to have a Statutory Agent (referred to as a Registered Agent in most states). A Statutory Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

The basic requirements to be a Statutory Agent in Ohio include:
– The agent must be an Ohio resident at least 18 years of age or a commercial Statutory Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.

Learn more about the requirements for a Statutory Agent in Ohio

The Statutory Agent must also provide consent they consent to be the agent for this LLC.

You are not required to pay for a Statutory Agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a registered agent service like Northwest Registered Agent to be the Statutory Agent will reduce unwanted phone calls and mailings.

Step 3: File the Ohio Articles of Organization

The paperwork to officially create an LLC in Kentucky is called the Articles of Organization. To submit the paperwork, either file online through the Ohio Business Gateway, which is the Ohio Secretary of State’s website.  If you would rather file the paper form, download the Ohio LLC Articles of Organization (Form 533a) instead.

When filling out the Articles of Organization, a few sections and terms can be confusing. Let’s go over a few of these sections to help get your LLC started right.

Effective Date – If you want the LLC to start as soon as it is filed, choose the next available date.  If you want to LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year.  By delaying until the following year, they will reduce the number of end-of-year filings.

Period of Existence – In this section, you can indicate how long it will remain in existence.  Most LLCs will choose a “Perpetual” duration as they plan to operate indefinitely; however, some businesses (usually investment-related) will have a specific closure date.

Purpose – Select whether your LLC is a non-profit or for-profit.

Purpose Clause – This is an optional section but would provide some basic information about what the business does.  If left blank, the default is “An LLC may be in existence for any and all lawful activity.”

Related: How to Answer the Business Purpose Statement.

Estimated Cost: 99 USD

Turnaround Time: It normally takes 2-3 business days when filing online, or about one week when filing by mail, for the Secretary of State to process the LLC paperwork.

You don't have to form your LLC by yourself or pay an attorney!

Forming an LLC is a little intimidating, especially when it’s your first time. Professional entity formation services help guide you to make sure it’s done right. Check out our reviews of popular LLC formation services to learn more.

You have an Ohio LLC! Now what???

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an Ohio LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Ohio operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership is that the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally the bank will request an Ohio Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Vendor’s License – Businesses selling products and certain services will need to register for a sales tax permit with the Ohio Department of Taxation will be necessary.
  • Commercial Activity Tax – All businesses that make over $150,000 will need to register and pay the CAT. The minimum tax is $150 and is paid to the Department of Taxation.

Related: What Business Licenses are Needed in Ohio?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: Types of Insurance Your Business May Need

Common Questions To Starting An LLC In Ohio

How much does it cost to start an LLC in Ohio?

The Secretary of State filing fee to start an LLC in Ohio is $99.

Is there a yearly fee for an LLC in Ohio?

There is no annual report or annual state fee for Ohio LLCs.

How long does it take to start an LLC in Ohio?

It normally takes 2-3 business days when filing online, or about one week when filing by mail, for the Secretary of State to process the LLC paperwork..

Do I have to pay to hire a registered agent?

No. Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state, and are generally available to receive documents during normal business hours.

What happens if an LLC doesn’t maintain a Statutory Agent?

If an LLC fails to continuously maintain, or fails to update, the name and address of its Statutory Agent, the Ohio LLC Act imposes penalties and may cancel the Articles of Organization. 

If I have an LLC, is a business license required?

It’s sometimes thought that the LLC and business license are the same, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.

What is a Foreign Limited Liability Company?

A foreign LLC refers to an LLC that is physically operating in states outside of the state where it was formed. Physically operating means having a presence, such as having an office or employee in the state. The LLC will need to register as a foreign LLC in each state that the LLC plans to operate.

Learn more about the foreign LLC.

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in Ohio, such as accountants, architects, veterinarians, etc., will want to file for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

Learn more about a professional LLC.

Is an LLC the same as a corporation?

The LLC is one of four main types of business entities. You can learn more about each here:
What is a sole proprietorship?
What is a general partnership?
How to form an Ohio corporation

Subscribe Now to the 60-day Startup Challenge!

Subscribe Now to the 60-day Startup Challenge!