A limited liability company (LLC) offers liability protection and tax advantages, among other benefits for small businesses.
LLC formation in Ohio is easy. Just follow these eight steps, and you'll be on your way.
1. Name your Ohio LLC
You'll need to choose a name to include in your articles before you can register your LLC.
Names must comply with Ohio's naming requirements. The following are the most important requirements to keep in mind:
- Your business name must include the words Limited Liability Company, LLC, or L.L.C.
- Your name must be different from an existing business in the state. You can do a search on the Secretary of State's website to determine if a particular business name is in use.
- The business name cannot contain words used to name a government agency (i.e., State Department, CIA, FBI, Treasury, etc.)
- Certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.
See a complete listing of Ohio's naming rules.
- URL availability. Even if you don't think you'll need a webpage, you probably will. At the very least, you should reserve the option of having one in the future by buying your domain name now. Before finalizing your LLC name, it's a good idea to check if the URL is available.
- Reserve your name. If you aren't ready to register your LLC but are concerned your name might be taken by someone else, you can reserve it for a small fee. In Ohio, names may be reserved for up to 60 days by paying the fee and submitting the proper form to the state authority.
2. Choose your statutory agent
Ohio requires you to appoint a statutory agent (also called a registered agent in other states) for your LLC.
A statutory agent or registered agent is the person or entity authorized to receive service of process and other official legal documents and notices on behalf of your LLC.
A statutory agent can be a person (including yourself or an employee of your LLC) or an entity that offers a statutory agent service. They must meet the following criteria:
- Entities (or companies) must provide statutory agent services.
- The agent must have an address in Ohio.
- The agent must be on-site and available to accept documents during regular business hours.
3. Check if your Ohio LLC needs a business or vendor's license
- Several industries that operate as businesses may need an Ohio business license. LLCs should consult this checklist on the Ohio government website to determine if the business needs a license.
- If individuals of the Ohio LLC sells tangible personal items or taxable services, the LLC must obtain a vendor's license from the Ohio Department of Taxation.
4. Prepare and file articles of organization
The Articles of Organization is a document that officially establishes your LLC by laying out basic information about it.
Prepare Articles of Organization and file them with the Ohio Secretary of State to register your Ohio LLC properly. Though it sounds like a big job, that simply means filling out a relatively simple online form and submitting it. You can also send it by mail.
To prepare your articles, you'll usually need the following information:
- Your LLC name.
- Purpose of the LLC.
- Effective date of the LLC.
- The street address of the LLC' s principal place of business.
- An LLC's duration or time period over which the LLC will exist. In most cases, LLCs are perpetual, meaning the duration is indefinite. A perpetual LLC can be dissolved voluntarily or involuntarily. If your LLC exists for a purpose that will end at a specified date, you will specify that date here.
- Name, contact information and signature of the statutory agent.
- The name and signature of a member, manager, or representative of the LLC.
Once you file your Articles, the secretary of state will review the filing. If the articles are approved, the LLC becomes a legal business entity.
5. Receive a certificate from the state
The state will issue you a certificate that confirms the LLC formally exists after the LLC's formation documents are filed and approved.
This certificate will allow the LLC to obtain an Employer Identification Number (EIN), business licenses, and business bank account.
6. Create an operating agreement
An operating agreement is a document that outlines the way your LLC will conduct business.
Ohio does not require an operating agreement, but it is an essential component of your business. Having a readily accessible, written operating agreement is helpful for various reasons, including settling disputes that may arise over financial agreements and other potential litigation. Without an agreement in place, the courts make determinations based on state law, not necessarily what is in the best interest of the LLC and its members.
The operating agreement can include, but is not limited to, the following:
- LLC's name and principal address
- Duration of the LLC
- Name and address of the registered agent
- Information about the Articles of Organization
- Purpose of the business
- Members and their contribution
- The way profits and losses will be divided
- Procedure for admitting new members, as well as outgoing members
- Management of the LLC
- Indemnification and liability clauses
7. Get an Employer Identification Number
The nine-digit Employer Identification Number (EIN) is assigned by the Internal Revenue Service to identify your LLC for taxes. You can obtain your EIN by mail or online through the IRS.
The purpose of an EIN is to assist with the following:
- File and manage taxes at the state and federal level
- Open a business bank account.
- Hire employees.
8. If your LLC has employees, you must comply with these employer obligations
- Report all new employee hires or rehires: Within 20 days of hiring or rehiring. LLCs must report new employees to the Ohio New Hire Reporting Center.
- LLCs must purchase workers' compensation insurance: LLCs must purchase workers' compensation insurance as soon as the first person is hired.
- Pay unemployment taxes: The LLC must establish an unemployment compensation tax account with the Ohio Department of Job and Family Services.
Registering your LLC gives you a legal foundation to conduct business. Plan to keep your LLC compliant and in active status on the state's website.
Ohio LLCs are not required to file an annual report. You may need to pay quarterly tax payments and may also need to maintain a registered agent for your business.
A registered LLC also makes it possible for you to do the following: