Why should you start a limited liability company in the state of Ohio?
An LLC in Ohio is a legal business structure under chapter 1705 of the Ohio state code. Why opt for an LLC?
The main purpose of an Ohio LLC is to protect your personal liability. If your business is sued, the court cannot go after your personal properties such as houses, cars, or bank accounts. For instance, if somebody gets an accident in your Ohio LLC and goes to court, the court cannot go for your personal assets. It can only go for the LLC assets.
If you want to know how to start an LLC in Ohio, follow this step-to-step guide to the end.
If you are looking for the top LLC formation service , you can find one in this post. In addition, make sure that you choose the right state to start an LLC. You can also learn more about top legal services in our Zen Business Review, or here, where we have Zen Business compared to LegalZoom.
How Do I Set up an LLC in Ohio?
To start an LLC in Ohio, you need to meet all the requirements of the state. For instance, you need to file your Articles of Organization with the secretary of state.
You also enjoy the versatility of the filing process, where you are free to apply online or by mail.
You can choose an effective date for your LLC. If you don't, the day of approval becomes the effective date.
How Much Will It Cost You to Start an LLC in Ohio?
If you want to start an Ohio LLC, you need to file Articles of Organization with the secretary of state. The Articles of Organization has a filing fee of $99.
Also, you need to maintain a statutory agent to keep operating your LLC business. If you hire a commercial agent, you will pay $125 per year.
If you want your documents to be approved asap, take your documents to the secretary of state's client service center in person.
If you want to reserve a name for your Ohio LLC, you can do so for 180 days. You have to fill a reservation form either online or by mail and pay a $39 filing fee.
Now that you know the requirements and how much it might cost you, here is the step-by-step guide on how to set it up.
Step 1: Choose a Name for your Ohio LLC
Getting a name for your Ohio LLC is the first and most important step. Before you can even file your legal documents to start operating the limited liability company, you need to come up with a name.
The name must be distinguishable and unique from any other identity of a corporation or partnership in the state.
What are the requirements for getting an LLC name in the state?
- According to the state of Ohio law, chapter 1705.05, your LLC name should end with the correct designator. Such designators include LLC, L.L.C, Ltd, limited, or limited liability company
- If you are unsure of the designator to use for your limited liability company (LLC), LLC is the most common designator
- Your choice should not sound like another legal entity. As such, it shouldn't contain words and abbreviations of a limited partnership, Lp, L.P, Trust, Corporation, or Incorporated
- It also should not confuse your LLC with any other government agency such as State Department, and FBI
You should check with the secretary of state business name database to check its availability. If you wish, you can reserve one for 180 days by filing a reservation form and paying a $39 fee.
Additionally, you don't need to use the legal name for your Ohio LLC. If you wish, you can get an alternate name, also known as DBA (doing business as). To do so, make sure you register the alternate trade name with the Ohio secretary of state.
Then, file a registration form (form 534A), and file a $39 fee.
Step 2: Get a Statutory Agent in Ohio
If you wish to continue operating your business in Ohio, you need to maintain an Ohio statutory agent. The agent is also known as a registered agent in other states.
The registered agent can be a company or an individual responsible for receiving legal mail on behalf of your LLC. Such legal notices include lawsuits and court orders. A registered agent acts as the correspondence between your LLC business and the state.
The statutory agent must be a legal resident of the state or a company registered and licensed to conduct business in the state. If you don't get a registered agent for your Ohio LLC, the secretary of state can take away the good standing status.
In case of continued non-compliance, the Ohio secretary of state can dissolve your company, meaning you can no longer transact business.
The agent should provide an address and phone number for the service of process.
Unlike other states which require the registered agent to have a street address, Ohio allows the use of a PO BOX.
Nothing stops you from choosing your family member or friend as your agent. If you go for this option, make sure your choice is 18 years old.
Alternatively, you can have a commercial statutory agent. The agent can be a company that receives legal and tax documents on behalf of your company at an annual fee. A commercial statutory agent can cost you about $125.
Using a commercial agent service is advantageous as it helps in maintaining your privacy. The company may allow you to use their address in the filing process, thereby keeping yours private.
Step 3: File Articles of Organization
Articles of Organization is the legal document that allows you to operate your business.
You should file the Ohio LLC Articles of Organization with the secretary of state. The process of LLC formation will cost you $99.
How long does it take for the legal documents to be approved?
Well, how long it takes will depend on your LLC filing method.
If you file online, you can have the documents approved in 1-2 business days. On the other hand, if you file the articles by mail, the documents' approval will take 3-7 business days.
You can pay the filing fee by check, credit card, or using a money order. If you choose the money order or check form, address it to "Ohio Secretary of State."
Send the completed Articles of Organization to the secretary of state, Regular Filing, P O BOX 670, Columbus, OH 43216.
After the approval of the documents, you will receive back some documents. These include:
- Certificate of organization
- Stamped and approved Articles of Organization
You will receive the documents by mail or email, depending on your filing method.
Step 4: Prepare an Ohio LLC Operating Agreement
Do you need an operating agreement to form an LLC in Ohio?
An operating agreement is an internal document, and you don't need to mail it to the secretary of state or any other government agency.
Although it isn't mandatory to have an operating agreement as you form your Ohio LLC, you should prepare one. Think of it as a constitution that governs your LLC.
Whether your LLC business is single or multi-member, an operating system helps in its smooth running. It also helps to maintain your liability as limited.
Step 5: Get a Federal Tax Identification Number
The tax id number is also known as Federal Tax Identification Number (FIEN) or Employer Identification Number (EIN).
The IRS issues the number during your LLC formation as its identification number. It helps in identifying the business, the same way a social security number identifies a person.
The number comes in handy when you want to open a business bank account and want business licenses and permits. Why should you have a separate bank account for your business?
It helps to maintain your limited liability by separating your personal account and that of the business.
Your business should be in existence before applying for the number. It doesn't cost you anything to get an EIN, as it is provided for free.
You can apply for the EIN either online or by mail. The online option is faster.
Note, depending on your location, you may require other business licenses and permits when forming an LLC.
Plus, you need to register your business with the Ohio department of taxation. You should also open an account with the Ohio Business Gateway and register for all state taxes. Some of the taxes the state imposes include commercial activity tax, public utility excise tax, sales tax, and employer withholding tax.
Step 6: File Annual Reports
Unlike in other states, when forming Ohio LLCs, the state doesn't require you to file an annual report.
If you have a foreign LLC or you want to start a new one, you may be lost on the best way to go about it. Here, we have a detailed step-by-step guide that makes the process seamless.