LLC

How to Start an L.L.C. in Ohio?

How to Start an L.L.C. in Ohio

Before starting a business, one must decide which business entity is best. An L.L.C. is a business-friendly and popular choice in Ohio. L.L.C. is a typical business structure in the United States, accounting for over a third of all businesses nationwide. A significant benefit of running an L.L.C. is that it provides limited liability to business owners by shielding them from legal and financial responsibility and many business debts. The owners of an L.L.C. are known as “members”. You can form an L.L.C. in Ohio through the Ohio Secretary of State. To start operating an L.L.C., you must register with the Secretary of State and pay L.L.C. formation fees.

Steps to Start an L.L.C. in Ohio

Name your Ohio L.L.C.

Before you register your L.L.C., you need to choose a name to include in the articles of organization. The name of the L.L.C. must comply with the naming requirements, which are as follows:-

  1. The name of the L.L.C. must include words such as Limited Liability Company, L.L.C. or L.L.C.
  2. The name of the L.L.C. must be unique and not the same as an existing business in the State. A search can be conducted on the Secretary of State’s website to determine if a business name is in use or not.
  3. The name of the L.L.C. cannot use words used by government agencies such as State Department, C.I.A., F.B.I., Treasury, etc.
  4. A few restricted words, such as a bank, attorney, lawyer, credit union, etc., may require a few more documentation and license paperwork.
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Additional considerations:

  • URL availability: Even if you think you’ll not need a webpage, at least reserve an option to have one in the future by buying a domain name. It is good to ensure that the URL is available before you register your L.L.C. name.
  • Reserve your name: If you are concerned that your name might be taken by someone else, you can reserve the name for up to 90 days by paying a small fee.

Choose a registered agent

Appointment of a registered agent is mandatory for an L.L.C. A registered agent can be either a person or an entity authorized to accept service of processes and other official legal documents and notices on behalf of your L.L.C. The registered agent offers a registered agent service and can be a person or an entity. A registered agent has to qualify for the following criteria:-

  1. It must provide registered agent services.
  2. It must have an address in Ohio.
  3. It must be on-site and available to accept documents during regular business hours.

Ensure Ohio L.L.C. has obtained the necessary business license or permit

Several businesses operating in Ohio need business licenses. L.L.C.s should check this checklist on the Ohio government website to determine whether the business needs a license. If the Ohio L.L.C. sells tangible personal items or taxable services, then it must get a vendor’s license from the Ohio Department of Taxation.

Prepare and file Articles of Organization

Articles of Organization are the document that establishes L.L.C. formally by laying out basic information about it. One has to prepare the articles of organization and file them with the Ohio Secretary of State to register Ohio L.L.C. properly. It includes filing a simple online form and submitting it. It can also be sent by mail. Usually, the following information is provided to prepare the certification of formation:-

  1. Name of the L.L.C.
  2. Address of the L.L.C.’s principal place of business
  3. Purpose of the L.L.C.
  4. The effective date of the L.L.C.
  5. Expected duration of the L.L.C.
  6. When will the articles become effective?
  7. Name and address of the registered agent of L.L.C.
  8. Name and address of the managers if the L.L.C. is manager-managed or the name and address of the members if it is member-managed.
  9. The name, address, and signatures of the organizers
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Receive a certificate from the State

On filing the certificate of formation, the secretary of State reviews the filing, and if the approval is granted, the L.L.C. becomes a legal business entity. The State issues a certificate confirming the L.L.C. formally comes into existence after the L.L.C.’s formation documents are filed and approved. This certificate allows the L.L.C. to obtain an Employer Identification Number (E.I.N.), obtain business licenses and open a business bank account.

Create an Operating Agreement

It is a document outlining the way an L.L.C. conducts business. It is not mandatory to have an operating agreement. Still, it is highly advisable as it is helpful for various reasons, such as settling disputes arising over financial agreements and other potential litigation. Without an operating agreement, the courts make determinations based on state law, which might not necessarily be in the L.L.C.’s and its members’ best interest. The operating agreement includes the following:-

  1. Name and principal address of the L.L.C.
  2. Duration of the L.L.C.
  3. Information about the Certificate of Organization
  4. Name and address of the registered agent
  5. Purpose of the Business
  6. Process in which profits and losses will be divided
  7. Members and their contributions
  8. Procedure for incoming and outgoing members
  9. Indemnification and liability clauses
  10. Management of the L.L.C.

Get an Employer Identification Number (E.I.N.)

E.I.N. is a nine-digit number assigned by the Internal Revenue Service to identify L.L.C.s for tax purposes. An E.I.N. can be obtained either by mail or online through the I.R.S. E.I.N. serves the following purpose:

  1. Open a business bank account
  2. To hire employees
  3. To file and manage taxes at the State as well as the federal level.
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Compliance with Employer obligations

The L.L.C. has to report all new hires and rehires within 20 days from the date of hiring and rehiring. New employees must be reported to the Ohio New Hire Reporting Center. The L.L.C. must purchase worker’s compensation insurance as soon as the first person is hired. The L.L.C. must establish an unemployment compensation tax account with the Ohio Department of Job and Family Services.

Wrap Up

In this blog, we have seen the requirements to start an L.L.C. in Ohio. From choosing a name for the L.L.C. to obtaining an employer identification number, all are simple steps that must be followed to ensure that your L.L.C. in Ohio is legally compliant.

FAQs

  1. How much does it cost to start an L.L.C. in Ohio?

    It costs $99 to start an L.L.C. in Ohio.

  2. Is it free to start an L.L.C. in Ohio?

    No, it is not free to start an L.L.C. in Ohio. To establish an L.L.C. in Ohio, you must file with and get your documents approved by the Secretary of State by submitting Form 610. The total filing fee of which comes to around $99.

  3. How long does it take to start an L.L.C. in Ohio?

    It takes one week to start an L.L.C. in Ohio.

  4. Do I need a business license for an L.L.C. in Ohio?

    Yes, you may need a business license for an L.L.C. in Ohio. It depends on the industry you operate in and where your Ohio L.L.C. is located.

  5. How do I know if I need a business license in Ohio?

    You know if you need a business license in Ohio by checking in which industry and at which place you operate.

  6. How is an L.L.C. taxed in Ohio?

    L.L.C.s do not pay a federal tax. Only its members do. Only a commercial activity tax applies to most Ohio business entities, including L.L.C.s.

  7. Is there an annual fee for L.L.C. in Ohio?

    No, there is no annual fee for L.L.C. in Ohio.

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