How to Start an LLC in Ohio: Cost and Registration Steps

Having a good idea is not enough to start a business? There is a formal part to observe that is establishing a legal structure to make your business eligible and lawful. More and more entrepreneurs around the US choose a limited liability company to support their ventures, and for a good reason. This type of entity is a sort of hybrid embracing the best features of sole proprietorships and corporations such as pass-through taxation, simple management, and limited liability protection.

Ponder on launching an LLC in Ohio? Not sure you can handle it? Well, since an LLC does require state registration, there is a formal procedure to follow. Yet, there is nothing you can’t do on your own, especially if you have comprehensive instructions at hand. Below, you’ll find detailed info on:

• Steps you need to take to register an LLC in the state of Ohio;
• Peculiarities of the LLC formation process and the cost of establishing this type of entity in Ohio;
• What you need to do after the LLC formation to start your business on the right foot and lawfully operate it. 

This article will become the helpful guide that will take you through the process of opening an LLC in Ohio.

How to Form an LLC in Ohio: Step by Step

Step 1: Name Your Ohio LLC

Similar to individuals, companies need names too. An LLC in Ohio can’t be registered without a name. So, the very first thing you need to do is to pick a moniker for your future enterprise. Though you can be creative when inventing a name for your LLC, there are still certain restrictions and rules to follow when naming your company. In Ohio, these regulations are set forth in the Revised Code Section 1701.05., which stipulates the requirements toward business names.

Words You Have to Use

Basically, there are two strict law requirements that you need to stick to when approaching a business name choice:

1. A legal entity type identifier is a must: Whatever the name you pick, to be acceptable under the Ohio law, it should contain the words or abbreviations “Limited Liability Company”, “Limited”, “Ltd.”, or  “LLC” to clearly demonstrate which type of legal structure your company belongs to; 
2. A business moniker is to be unique in the state of Ohio: It means your chosen name should not resemble or be similar to any other business names already registered by the Ohio Secretary of State. Unless you meet this requirement, your filing application will be declined. This rule is highly important since it works to maintain fair competition and avoid any unwanted confusion among the businesses.

Words You Can’t Use

Along with requirements, the Ohio Revised Code also imposes certain restrictions you’ll have to take into account when inventing a name for your future LLC:

1. You are not allowed to use any other business identifiers while naming an LLC. Any words implying a different business structure are banned. Likewise, words making references to governmental institutions are also prohibited; 
2. You should refrain from using such words as “bank”, “legal firm”, “insurance company”, “credit agency”, and alike in your company name; 
3. Avoid making professions a part of your business name unless you have special licenses and other required permissive documents at hand; 
4. Remember that by introducing articles, conjunctions, suffixes, or plurals, as well as by changing the forms of words or using capital letters and abbreviating words, you won’t make a business name distinguishable. Instead, you should play with synonyms and keywords or apply a totally different approach to naming.

Example

The company’s name “ Laney and Co., LLC” is similar to “ Lany and Co, Ltd.”, “Laney & Co., LLC”, “Laney and Co, Limited”, “ Laney and Co. LLC”.

Before entering a business name into your formation docs, make sure it doesn’t fall under the restrictions of the Ohio Revised Code and is in compliance with the Secretary of State’s naming guidelines.

A lawful business name is of prime importance when you need to get a license or some sort of state permit to run a business in the state. So. you’d better double-check with the Secretary of State before registering one or another name version.

Ohio DBA: Using a Fictitious BusiResearch the LLC Name You Want

Starting an LLC in Ohio when picking a name for your future venture, it’s always nice to have more than one version at hand so that you get a replacement option, should the desired name appear unavailable. And how do you know if a business name you come up with is available? Well, that’s quite simple. You need to do a name search. You can do it via a dedicated search tool on the Ohio Secretary of State’s website. This service is free and will enable you to check all the name versions you have. You are also entitled to send an email to the state department or contact them by phone and ask them to check the name availability for you.

In case you drastically want some name that is already taken by some other company, you’ll be able to assign it to your enterprise only if that other user agrees with that. And it’s not enough to get their potential consent verbally, you’ll have to provide an agreement in writing by submitting a special “Consent of  Use of a Similar Name” form when filing an LLC.

Once the name you want appears available, you can either use it for LLC registration straight away or put it on hold until you are ready to file. In the state of Ohio, you can reserve a business name for a period of 180 days. You just need to send a filled Form 534B to the Secretary of State and pay a name reservation fee of $39.

You can submit a name reservation form either on paper or in a digital format. While you are always free to send it by regular mail, electronic applications are processed much faster. So, your chances to get protection for the chosen name version are higher if you file the reservation request via the Secretary of State’s website.

Ohio DBA: Using a Fictitious Business Name

DBA stands for “doing business as. It’s also called a fictitious, assumed, or trade name. Different from registered business names, DBAs are widely used in the real world to operate businesses. The best thing about DBAs is that naming rules are much less restrictive here, and you don’t have to include an LLC identifier in the company’s name. On top of that, you can set up as many DBAs for your LLC as you need. All of these make DBAs very popular among entrepreneurs who seek to run different types of activities or establish several product lines and are not very eager to set up multiple LLCs. With fictitious names, though, you can have a few brands or operate in different industries under the legal umbrella of the same LLC. Likewise, you can extend your business to another state or easily change the name of the growing company to something you consider more appropriate.

If you run your LLC under a DBA “Christine’s Pies”, you can swap it for “Christine’s Sweet Shop” over time when you grow your business and start selling not only pies but also donuts, cakes, cookies, candies, and other sweets.

In a word, you can register your business under one name and operate it under a totally different name to achieve your strategic and marketing goals with less hassle and fewer formalities to follow.

To use a different company name for trading and marketing purposes in Ohio, you’ll have to register a DBA with the state. Notably, each DBA you are going to use requires a separate registration. Before filing, you need to choose the name availability similar to choosing a registered business name. Then, you should submit a DBA registration form via the Secretary of State’s website and pay a filing fee of $39.

Step 2: Appoint a Registered Agent to Create an LLC in Ohio

The registered agent’s function is receiving legal correspondence, i.e. any official documentation, state notifications, filing and reporting requests, services of process, court letters, etc. Though it seems like nothing special at a glance, this role is vital for an LLC since it serves as a consistent point of contact between your business and state authorities or any governmental structures. Besides, by handling your legal mail and transferring urgent messages to you in an opportune manner, a registered agent helps your business stay compliant with the state and avoid any problems in this concern.

Registered agent in Ohio is called a statutory agent. The law requirements for this position are quite flexible. Thus, any individual over 18 years old or a legal person registered in the state could perform this function for your LLC. No specific education, training, or professional background is required. A rule of thumb is that a statutory agent should be an Ohio resident permanently present under the registered address during business hours on weekdays to timely receive all the incoming mail.

Many startuppers and beginner entrepreneurs often choose to be their own statutory agents to avoid paying someone for this service. Besides, it’s easy, safe, and reliable since you’ll personally receive all your documents preventing sensitive mail from being reviewed by any third parties.

On the other hand, there are many quite solid reasons why you should delegate statutory agent duties to a hired individual or service:

• Improved Privacy: You won’t have to make your personal data a part of public records and keep them private; 
• Protection against junk mail: Typically, businesses get a lot of spam letters with promotions, advertisements, and all sorts of proposals. Chances are great you could miss important papers in the piles of junk mail. A hired agent will sort out the correspondence and redirect all crucial letters to you; 
• More efficient process management: A hired agent will ensure consistent presence to get all your legal mail in time. And you’ll be able to plan your time as you deem necessary. Travels, vacations, and business trips are made easier when you don’t have to worry about mail; 
• Peace of mind: You won’t have to worry about errors, mistakes, missed or lost letters. When there is a dedicated statutory agent, the risk of missing something is cut down to a minimum.

If an idea of delegating statutory agent duties speaks to you, there are two ways you can follow:

• Appoint a third-party individual with appropriate background: you can confer this task to an accountant, attorney, financial consultant, or even some specialist in your own LLC;
• Hire a professional service: there are multiple business formation services on the modern market providing registered agent service on a permanent basis. Normally, it will cost you anywhere from $100 to $150 a year plus some shipping costs. Yet, the benefits you’ll get are well worth the money. Besides, those services are usually available nationwide, so you won’t have a problem finding a registered agent should you seek to extend your business to other states.

In our article on the Best Registered Agent Ranking, you’ll find our recommendations on the services that will be a good alternative if you do plan to hire a third party for that purpose.

Step 3: File Your Ohio LLC Articles of Organization

To get an LLC in Ohio the Articles of Organization or Certificate of Formation is your major LLC document. It’s the evidence of your business state registration that gives your company an eligible status. Though pretty simple, this document is of utmost importance since, without it, a legal entity is non-existent. Covering general company info, the Articles of Organization makes your business visible in the legal arena and proves its lawful status to both governmental authorities and other businesses.

When your business name is checked and a registered agent is appointed, it’s time to complete and file the Ohio Articles of Organization to bring your LLC to life. The document is to be submitted to the Secretary of State for approval and registration.

If you are reluctant to get into formalities of the filing process and would rather let somebody else do it for you, a professional LLC service will come to help. And in our Best LLC Services review, you’ll find a list of providers that deliver by far the best service.

What to include in my Ohio Articles of Organization?

The Articles of Organization is a generic document that has a standardized form. In Ohio, this document is regulated by the Ohio Revised Code Section 1705.04, and you can download a ready-made template from the Secretary of State’s website. The data to be filled in include:

• A full LLC name and detailed address;
• A statutory agent’s name, address, and signature;
• A name and contact info of the LLC organizer (a person that files the documents);
• Name and signature of the representative of your future LLC, who is either a company owner, manager, or an individual duly authorized for that purpose.

The Articles of Organization form also contains such points as an effective date, the purpose of your LLC, and the term of its existence. While other states require this info to be filled, in Ohio, these clauses are optional. Keep in mind, though, that if you leave an effective date field blank, the document will come into force on the date of its registration. And if you skip specifying the period during which your LLC will stay valid, the legal entity will exist until it’s dissolved for some reason.

You can either file formation documents online or send those by mail. Similar to other states, online filing in Ohio is a faster option.

How Much Is an LLC in Ohio? Filing Fee

Each state imposes a fee for reviewing and registering formation documents. Those fees are not the same nationwide and vary from $40 up to $400 and even more. In most states, though, a state fee falls anywhere between $50 and $100. Ohio is not an exception in this concern. The state charges $99 for filing the Articles of Organization for an LLC. This fee is to be paid via the state department’s website as you fill in the application form.

Ohio Turnaround Times

Normally, it might take the state department from several days to several weeks to process formation docs. The state of Ohio is quite speedy in this concern since it promises to review your papers in three to seven business days. In practice, though, it’s not always the case since the Secretary of State’s workload varies and it might impact the processing speed.

However, Ohio is one of those states that offer more than one express filing option. Thus, you can get your docs approved within two business days at $100 or get them back within a single business day or even four hours by paying $200 or $300 accordingly. For one-day and four-hour filing, you’ll have to hand in the papers to the Secretary of State’s Office. Besides, four-hour processing also requires the documents to be submitted before 1 p.m.

Step 4: Draft your Ohio LLC Operating Agreement

As the name suggests, an Operating Agreement is an agreement between the company owners on the business operation and management. Section 1705.081 of the Ohio Revised Code interprets it as a control tool for regulating member relationships inside the company. As such, an Operating Agreement is rather an internal instrument than a law requirement. Indeed, in Ohio, the state law doesn’t call for Operating Agreement filing and registration. It doesn’t even call for having an Operating Agreement.

In our turn, we do recommend drafting an Operating Agreement. As an LLC member, you are the one who needs it most of all. By outlining the rules and procedures of business operation and control all LLC members agree upon, this instrument will help avoid internal conflicts and disputes that might arise over time and will negatively impact your business activity.

 Crucial points covered by an Operating Agreement include:

• Ownership structure;
• Members’ voting rights;
• Members’ powers and liabilities;
• Manager rights and duties;
• Profits distribution;
• Procedures of hiring and dismissing company managers;
• Making changes in LLC membership structure, i.e how members could join or leave the company;
• LLC dissolution process;
• LLC tax status.

Given the aspects it covers, an Operating Agreement is a vital element for maintaining liability protections and the overall LLC status of a legally independent entity that is run rightfully and diligently. The document is a result of members discussing the business operating rules in detail and mutually agreeing on them.

Though the document needs no state registration, it’s advisable that you’ve made several signed copies and keep the original safe along with the rest of your formation docs.

Step 5: Get an EIN (Employer Identification Number) for Your Ohio LLC

An EIN is an Employer Identification Number. The other name is a Federal Tax ID. Issued only for business entities, this number has a function similar to that of Social Security Numbers for individuals. Thus, it’s used as a personal code identifying your business as a taxpayer and a financially independent entity. EINs are widely used by governmental authorities and financial institutions for tracing business transactions and controlling tax and other business-related payments.

While multi-member LLCs do need EINs, single-member LLCs are not required to get them. However, our recommendation is that you acquired an EIN for your LLC from the start, no matter its structure. You might need it for many other purposes such as:

• Opening a business bank account;
• Hiring employees;
• Registering for the franchise and other specific taxes;
• Getting a corporate tax status for your LLC.

An EIN is assigned and issued by the Internal Revenue Service (IRS), and the application process is a breeze. You can file for an EIN online through the IRS website and get the number back in mere minutes. Submitting an application on paper is also possible, yet, you’ll have to wait for your number much longer in this case.

First Tasks After Setting Up an LLC in Ohio

Your LLC is considered established when you get your approved formation documents back from the state department. Yet, it’s only the first formation stage you’ve completed, there is more to come. You’ll still have to accomplish a few other important tasks that will make sure you run your venture on the right legal foot.

Open a Business Bank Account

Many beginner entrepreneurs underestimate this step and even skip it. However, using your personal bank account for business purposes can eventually lead to many unpleasant issues:

• Jeopardizing your limited liability shield: Mixed personal and business assets will put your corporate veil at stake, should any lawsuit involving your company arise. The court will consider you treat company funds as your own and give creditors a thumbs up for taking your individual property to settle business liabilities;
• Bookkeeping problems: Without a separate business checking account, it will be very hard to trace business cash flows and work out efficient business budgets; 
• Limited financial opportunities: At some point, any business might need some financial support to maintain growth, give a boost to some projects, or resolve temporary problems. Yet, creditors and banks are reluctant to provide loans to companies with no business bank accounts. 

Thus, to keep your liability protections intact and further maintain legal business independence, it’s advisable that you open a dedicated bank account for your LLC right after its formation.

Get Business Insurance For Your Ohio LLC

Private business is not only about earning money and gaining profit, it’s also about liabilities, commitments, and great risks. So, the desire to protect your newly formed enterprise and minimize those risks is natural. With the right business insurance in place, you’ll get a chance to keep many of the risk factors away.

By and large, the types of insurance could be divided into compulsory policies required by law and optional ones meant to provide additional layers of protection. If you use the work of hired employees, you’ll be obliged to get worker compensation insurance and unemployment insurance. Besides, liability insurance is a must if you don’t want to lose money to some error or accident.

Some other types of insurance common for businesses include business income, commercial property, professional liability insurances, and alike. To get a full list of insurance recommendations on your type of business activity, you can consult a professional business insurance agent and your accountant.

Keep Your Ohio Company Compliant

One of the strictest law requirements toward LLCs is that they should stay compliant with the state. Compliance means catching up with important state filing and reporting dates and diligently providing any business-related info required by the state. And there are a few rules you’ll have to observe in this concern.

Ohio Business Permits and Licenses

Most likely than not, an LLC needs some sort of permissive documents to legally operate in the state or county. Depending on the type of activity you run and the industry you operate your business in, you might need one license or several permits. Notably, those licenses can be required at a federal, state, or local level.

Licensing is usually a tricky issue to cover. So, to get a full list of permissive docs appropriate for your LLC in Ohio, you’d better contact a State Department and your county’s or city’s clerk office.

Ohio Tax Requirements

Taxes are yet another slippery path for many first-time businessmen. Though overall, LLC taxation is straightforward and LLCs are free from paying corporate taxes (unless you choose this taxation method for your company), each state has specific taxation requirements, not to mention taxes dependent on your business activity. Thus, employers will have to file employee-related taxes while commercial ventures are exposed to sales taxes and permits. Besides, if your gross income from sales in Ohio is over $150,000, you’ll have to pay an added commercial activity tax.

Consult the Ohio Department of Taxation for a complete list of taxes to register for your LLC.

Annual Report and other Filing Requirements

Ohio is one of a few states that do not impose annual reporting rules on LLCs. And there are no related annual fees to pay as well.

Ohio Business Formation Quick Links

• Apply for an Employer Identification Number (EIN)
• Ohio Bureau of Workers’ Compensation
• Ohio Department of Job and Family Services
• Ohio Department of Taxation
• Starting Your Business in Ohio
• IRS — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• Ohio Secretary of State Business Services

FAQ About Ohio LLC Registration