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Do you have big ideas for your business? An LLC might sound fancy, but it’s also a great way to protect your business. If you’ve been scared off by the idea of complex paperwork and legal requirements, we’re here to help. Follow these steps to start your LLC in Ohio and make things easy for yourself.
Why Starting an LLC in Ohio is Worth It
An LLC offers your business protection from lawsuits and other claims. It means you can worry less about what happens to your assets in those situations and instead focus on growing your business.
When it comes to taxes and regulations, LLCs have less strict guidelines and less paperwork than other types of businesses. As an LLC, you also avoid getting taxed twice as a C-corporation. You also have some say in how you get taxed, either as a corporation or pass-through entity.
LLCs have fewer general obligations than corporations, too. For example, they don’t pay an annual fee or report to continue doing business as an LLC.
Unfortunately, looking at a few drawbacks to starting an LLC in Ohio, you’ll pay higher self-employment taxes. You also can’t raise money for an LLC in Ohio by issuing stock, making it harder to fund your business.
The Investment Needed to Start an LLC in Ohio
Most of the investment you’ll need when starting an LLC in Ohio is time. However, you’ll need a small financial investment, too.
When reserving your LLC name, you’ll need to shell out a $39 processing fee. That guarantees that no one else will take your business name for a given amount of time.
You also need $99 to file your articles of organization. That brings the bare minimum starting investment to $138. It’s higher if you choose to work with a business attorney.
Unlike in other states, you don’t have to pay a yearly fee for your LLC in Ohio. That saves you some money, but you have other ongoing expenses to think about.
If you need workers’ compensation insurance—which many LLCs do—you’ll have a filing fee of $120. From there, you’ll need to make sure you have the financial ability to keep paying workers’ comp insurance for your workers.
In terms of time, it can take weeks, or even months, to fully set up your LLC. You’ll need to file articles of organization, draw up an operating agreement, and take care of other legalities and paperwork.
All of these tasks vary based on both processing times after you submit your materials and how long it takes you to do everything. Some businesses only take a few weeks, whereas others need a few months to get things underway.
You might want to get business software to help you set up your LLC. ZenBusiness gives you additional tools to make it easier for you to build and improve your LLC.
It guides you through creating and submitting your LLC documents and saves you time. It offers many resources specific to your state, so you know you’re in compliance with all regulations.
The software doesn’t leave you on your own once you’ve finished setting up either. It gives you templates for agreements you need for your business, helps you get a statutory agent, and more. ZenBusiness takes some of the most tedious parts of forming an LLC and makes them easy for you.
6 Steps to Start an LLC in Ohio
Before starting an LLC in Ohio, look at these steps to learn more about what you’re getting into. We give you all the information you need to get things done without hassle.
Step 1—Choose a Name
To form an LLC, you need a unique name for your business. According to Ohio law, that name must be easy to distinguish from other Ohio businesses.
If the name sounds similar to another business, you can’t use it. For example, if “Bargain Books” already exists, you can’t name your new company “Bargain Bookstore.”
Once you choose the name, it must end in LLC or Limited. You can also use abbreviations like Ltd or L.L.C.
You also can’t use certain words in the name unless you have those types of businesses or licenses. Some of those words include:
You can use the Business Search feature on the Ohio Secretary of State website to find out if yours is available.
Once you choose your business name, you’ll need to submit a Name Reservation Form, known as Form 534B. You can submit the form either online or mail a hard copy with your $39 processing fee. After that, you have 180 days to file your articles of organization with your reserved business name.
If you want to do business under a name other than your LLC name, you need to get a Doing Business As (DBA) name. A DBA is the name that customers and clients see when they look you up and work with you. ZenBusiness can help you come up with one.
A DBA helps with branding and setting your business apart from the rest. ZenBusiness has the resources you need to come up with a DBA name that catches your audience’s attention.
When it comes to your DBA, you don’t need to make it different from everyone else. This time, if you want to name your store Bargain Books and there’s already another Bargain Books out there, that’s fine.
Step 2—Appoint a Statutory Agent
A statutory agent, also known as a registered agent, receives your LLC’s official documents and forwards them to you. You can use either a business or an individual as your statutory agent.
If you choose an individual, they must be 18 years old or older, able to receive documents during all regular business hours, and be a resident of Ohio. If you choose a company, their business address must be in Ohio.
You can also serve as your own statutory agent or appoint a business partner for it. But if you’re not available to accept your own documents, you could run into problems.
For instance, if you’re not on-site at your business, you can’t receive the documents. Plus, if you receive papers for a lawsuit or other legal matter at your business with customers around, it could lower customer confidence in your business.
ZenBusiness can help you find and register your statutory agent. They also offer registered agent services if you don’t already have someone you want to use.
The ZenBusiness Starter plan comes with a registered agent, so you don’t even have to spring for the more expensive packages to get this feature.
ZenBusiness offers three tiers of service:
- Starter: $49 per month plus $99 Ohio fee
- Pro: $199 per month plus $99 Ohio fee
- Premium: $299 plus $99 Ohio fee
The Standard package comes with all the basic features you need to form your LLC, including the standard filing service and an operating agreement template. It can help you prepare and file your LLC, search for name availability, and gives you online document access.
You get free accounting consultation, and with this version, you can add on other specific features if you don’t want to upgrade your whole package.
Pro has all the Starter features, plus an employer ID number, expedited filing speed, and worry-free compliance. You can still add on a few other features for an extra fee, but a few are only available with the Premium package.
Premium gives you rush filing, a business website and domain name, domain name privacy, and your own business email address.
Step 3—Get an Ohio Business License if Necessary
If your business sells physical goods or taxable services, you need an Ohio business license. The Secretary of State can tell you more about specific licensing requirements for Ohio.
When you have a business that requires this type of license, you’ll also need to collect sales tax and pay that tax to the Ohio Department of Taxation each month.
If you have a DBA, you’ll need to register it with the state. That process comes with a filing fee of $39.
ZenBusiness has several resources to help you find out more about obtaining a business license. Their software can help you organize the documents you need.
The ZenBusiness website has plenty of information if you need answers about Ohio business licenses.
Step 4—File Your Articles of Organization
Filing your articles of organization officially forms your LLC. To do this, you’ll need Form 533A if you’re a domestic LLC or Form 533B if you are creating a foreign LLC. A foreign LLC is just one that was originally formed in any other state.
Online processing is faster, but you have the option to send the form by mail. No matter how you send it, you’ll need to pay the $99 filing fee.
With your articles of organization, you’ll need to include the following information:
- LLC name
- Statutory agent’s name, signature, and contact information
- Name and signature of the person who completes the articles of organization
Foreign LLCs must include the state where they initially filed the articles, as well as the date of filing.
Optional inclusions in the articles include the LLC’s effective date, period of existence, and purpose. Not all of these are necessarily applicable to your business. For example, the period of existence will be listed as indefinite if you don’t fill that part out.
Once you submit your articles, the state will process them within a week. With ZenBusiness, you can request expedited or rush document filing for these and other documents.
After that, you’ll get an official stamped copy of your articles from the state.
At this point, you’ve created your LLC. But you still have a few more steps to go before you can operate in top form.
Step 5—Draft Your Operating Agreement
You don’t need an operating agreement by law, but it helps when you’re figuring out how you want to run your LLC. It should outline everything you need to know about business processes and each owner’s role in the company.
A few things you should include in your operating agreement include:
- LLC purposes
- Owner and manager names and addresses
- Member contributions
- Member roles and responsibilities
- Voting rights, interest, and profit division
- Processes for new members, members leaving the company, and electing a manager if necessary
- Meeting processes
- Procedure for dissolving the LLC if necessary in the future
The operating agreement is one of the lengthiest parts of creating your LLC, even though it comes after you’ve technically completed the process. With a template and guidance from ZenBusiness, you can make the process more efficient.
You may want to hire a business lawyer to help you draft this important document. They can make sure you have all the necessary components and that it’s fair for all involved.
Just remember that working with an attorney also means a much higher expense in creating your LLC.
Step 6—Pay Taxes and Get Insurance
To pay business taxes, you need an employer identification number (EIN). With ZenBusiness Pro and Premium tiers, you can get an EIN through the software. The Starter package requires you to pay $70 to access the feature.
All businesses must pay Ohio business taxes. However, with an LLC, those taxes pass through the owner’s personal taxes.
The advantage to that process is that LLCs avoid double taxation, where both the business and the personal taxes get taxed.
If you have gross sales of over $150,000 in Ohio, you’ve also got to pay a commercial activity tax. The rate depends on your business. If you meet the requirements, you’ll have to withhold some of your employees’ pay to cover payroll taxes.
You’ll also need to withhold Social Security and Medicare taxes from your employees’ pay to cover those expenses. You’ll also need to pay your self-employment taxes for those purposes.
Along with taxes, you must report all new employees within 20 days of hire. Ohio law also requires you to get workers’ compensation insurance through the state.
That requirement is different from many other states in that in Ohio, you can’t purchase private workers’ comp insurance. To get workers’ comp insurance from the Bureau of Workers’ Compensation, fill out Form U-3 and submit it with your $120 fee.
You’ll have to pay taxes and maintain your insurance policy for as long as you operate your LLC. Make sure that you always set aside funds for these purposes.
As you grow your LLC, you’ll need to keep up with marketing. To get your name out, create a marketing campaign that catches your customers’ attention and keeps them coming back.
When it comes to the future of your LLC and even while drafting your operating agreement, check out these steps to dissolving an LLC and why you might need to do it.
Once you’ve completed these steps, you’ve successfully created your LLC! From here, you can focus on your business growth and success.