The LLC’s business name in the state of Ohio must be secured before you proceed with any proprietary purchases, such as a domain name or business cards. The state of Ohio does not allow you to reserve a business name without a fee.
You may not form an Ohio LLC under a name that incorrectly implies that you are, or are affiliated, with a government agency (e.g. FBI, IRS). Your new Ohio LLC’s name must conclude with one of the following: Limited Liability Company; LLC; L.L.C.; Limited; Ltd. or Ltd. Additional steps may be required for businesses including banks, trusts, insurance agencies, dentists, cooperatives and legal professional associations.
The filing time is 7 business days and can be expedited in 2 business days.
State Filing Fees
There is a $99 filing fee for creating an Ohio LLC. The filing process can be expedited for an extra fee, if a faster service is desired.
Articles of Organization and Operating Agreement
Create and file articles of organization with the Ohio Secretary of State’s office is the next step. The articles of organization must include:
The name of your Ohio LLC.
The name(s) and address(es) of the organizer(s).
The LLC’s primary business address.
These articles must be signed by at least one of the LLC’s organizers or a person that is authorized to represent an organizer.
The articles of organization may include additional information if members so choose (as long as they do not legally conflict with any laws), such as the effective date of operation, period of existence, purpose clause and whether or not the LLC will be run by a single manager or multiple managers.
The LLC’s registered agent’s name and address, in addition to a document stating that the agent agrees to the position and the responsibilities that follow.
Following articles of organization, the next critical step is creating an operating agreement for your business. This agreement does not have to be set in stone and can be amended or repealed to reflect changes within the organization, as stated in the agreement or applicable law. While the operating agreement is not required by the state of Ohio, it is critical to spell out the operational structure of your Ohio LLC, and how it will be run. An operating agreement covers:
Who the members are (see how membership works for Ohio LLCs below).
The amount each member has invested.
How the profits will be divided.
The voting share among members.
The roles of each member.
Requirements for meetings.
Buyout stipulations and terms.
Dissolution requirements and terms.
Constraints on members’ ability to amend, repeal or adopt the operating agreement.
The operating agreement must be confirmed in writing by all members of the LLC, if there is more that one member at the time of formation.
Ohio LLCs are required to have one or more members, none of which can be business entities. Members are decided upon before the formation of the LLC based on the contributions of the individual(s).
These contributions can come in the form of a cash investment, equipment, proprietary information, etc. It is important to document these contributions in the articles of organization or operating agreement to have them on file for future considerations.
The operating agreement should also note the terms for membership resignation, retirement and in cases of dissolution or acquisition. This will help protect the LLC from losing a valuable member without warning, yet gives members the option of pursuing other professional endeavors as long as they follow the proper steps.
Ohio LLCs are required to have a registered agent that resides within the state of Ohio who can receive both administrative and legal forms from the state on behalf of the LLC. If your registered agent is a business entity and not a natural resident of the state of Ohio, they must have a business address in the state of Ohio in order to receive important documents during normal business hours
Your LLC will not be considered a legal business until you deliver the original articles of organization, along with a certified copy, to the Business Services Division of the Ohio Secretary of State’s office, as well as the filing fee. Once this process is completed and the state has entered your LLC into its records, your Ohio LLC is fully formed and operational.
Ongoing Filing and Compliance
Ohio LLCs are required to perform additional tasks on a recurring basis to stay concurrent with the state. Ohio, unlike other states, does not require an annual report, which saves LLCs time and money. However, there are other steps to keep your business fully operational:
Ohio LLCs are required to attain an Employer Identification Number (EIN) from the IRS in order to hire employees. Additionally, most banks will require an EIN to open a business account.
Certain business require certification in order to legally operate. Be sure to attain these certifications after your LLC has been properly formed.
Quarterly taxes will need to be filed through the state as well as yearly taxes through the IRS.
An Ohio LLC is considered dissolved by the state when any of these events occur:
An act or event occurs that requires dissolution as specified in the operation agreement.
A valid number of members, as specified by the operation agreement, agrees to dissolve the LLC.
A legal issue making it unlawful for the LLC to continue operation.
The LLC loses one of its members and the remaining members do not agree to continue the LLC within 90 days.
There is a judicial decree that orders the dissolution of the LLC.
Expanding upon this ongoing responsibility for LLCs, filing taxes is an important part of business ownership. Luckily forming an LLC in Ohio provides a favorable tax environment for business owners when compared to corporations. Not only do LLC owners have the ability to take advantage of more tax deductions, but it may also operate as a “pass-through entity,” so that an LLC owner can choose to file the business’ gains and losses on his or her personal return, without having to file separately.
LLCs with multiple members will be categorized as partnerships, unless the members decide to be taxed as a corporation. Again, this means that the LLC does not have to file separate taxes, but rather that the members each pay taxes on the percentage of the profits in which they are owed on their personal returns.
The tax rates for Ohio LLCs varies depending on the business’s taxable net income.