Starting a Business in Ohio: Everything You Need to Know
Starting a business in Ohio is similar to starting a business in any other state with a few exceptions. 8 min read
Starting a Business in Ohio
Starting a business in Ohio is similar to starting a business in any other state with a few exceptions. You’ll need to register your business name with the state, comply with the state’s tax laws, obtain necessary permits and licenses, and choose a business structure before you can officially open your doors to the public.
Name Your LLC
In order to officially start a business in Ohio, you need to come up with a name for your limited liability company or LLC. You need to come up with a name that conveys the essence of your business to investors and consumers. This title should also searchable on websites like Google, so that your customers can find you online. You also might want to copyright the name, so make sure that it’s not already in use by another company. The name needs to include the term “LLC” in one way or another. You can add Limited Liability Company, limited, or ltd at the end. Remember to stay away from certain legal terms such as “college” or “bank”, as you’ll need to file extra paperwork.
Choose a Statutory Agent
The state of Ohio stipulates that every company have what’s known as a Statutory Agent. This person is responsible for sending and receiving all the required paperwork for the company. They are the state’s first point of contact when dealing with the company. This person must also live in the state and must present a proof of residency.
File the Articles of Organization
You also need to file what are known as the Articles of Organization, a legal document that outlines how your business operates, its holdings, as well as the structure of ownership. You can file the Articles of Organization on the state’s website, at your local government office, or by mail. Visit the state of Ohio’s business registry page for more information.
Obtain an EIN
Also known as an Employer Identification Number or Tax ID Number, EINs are a crucial part of owning a business. The state will use this code to properly identify your business for tax purposes. You can jump over to the IRS website to download the application form online.
Congratulations, you’ve done most of the heavy lifting when it comes to starting a business in Ohio. Now comes the hard part, keeping your business alive and well.
Key Steps After Forming a Business
Now that you’ve successfully started a business in Ohio, it’s time to protect your new endeavor legally and financially. If you have any personal finances tied up in the company, you need to transfer them to a separate bank account. It’s common for entrepreneurs to use some of their own money when starting a company, but it’s time for a clean slate.
As a new business owner, you’ll need to establish a line of credit. You can start by signing up for a company credit card. You can use this to make some of your first purchases including office supplies, a company car or storage space. If you need to take out a loan in the future, it helps if you already have a line of credit with one of the lending institutions in your area.
You also need to get in touch with the state regarding state and local taxes. A portion of your employees’ money will go towards the state’s budget. This includes both Unemployment Compensation Tax and the Employee Withholding Tax.
Just by running a business in the state of Ohio, you’ll also have to pay the Commercial Activity Tax. This is mandatory for all LLC’s in the state, regardless of what kind of business the company is involved in. If you plan on selling goods and products, you will need to register with the state regarding sales tax. The state will add a small percentage, currently around 7% depending on your county and zip code. You will also need a vendor’s license in order to sell products to consumers in the state of Ohio.
Every business needs some form of accounting services. If you’re a small startup, either yourself or someone on your staff will have to pull double duty and take on some of the accounting responsibilities. If you have the means to hire someone, do it. You’ll have peace of mind knowing that you have a reliable partner when it comes to keeping track of your business’s services.
You might also want to consider investing in accounting software. Most U.S. companies do the bulk of their accounting on the computer. These programs are designed to help you organize and easily share your business’s financial information. When it comes to storing and sharing important financial information online, you need to have some kind of cybersecurity in place. Otherwise, someone may hack your computer and pretend to conduct business on your behalf. If you don’t have a lot of financial dealings, you can probably save some money and get by with a simple Excel document.
Now that you’re established a LLC in Ohio, you need to obtain the proper licenses and permits from the other forms of government including the federal government and your local county’s government. Remember that every county is different. Contact your local Chamber of Commerce office for more information. Make sure that you’ve done your homework and contacted all three forms of government before you officially open your doors. You might also want to seek the counsel of a business consulting firm to make sure that you’ve complied with all the necessary rules and processes.
If you’re hiring employees you need to get what’s known as Workers Compensation Insurance. This means that if one of your employees gets injured on the job, the insurance company will help pay for their recovery including medical bills. It’s your job as the employer to make sure that all your employees comply with the law. They must be legally able to work in the U.S. Paying employees under the table will only lead to disaster for both you and your new company.
How to Maintain Your LLC
Some states require that you file an annual earnings report. Luckily, Ohio is not one of those states. You are required to pay the Commercial Activity Tax if your total earnings exceed $150,000. While the state does not actively monitor your earnings, the IRS will during tax season. Make sure that your income levels comply with the state’s tax laws.
Obtain a Certificate of Good Standing
A Certificate of Good Standing means that your company has successfully met all the state’s legal requirements, including registering the with state, obtaining all the necessary forms and permits, and registering with the state tax office. You will need this certificate going forward if you plan on reaching out to investors. The state may change your legal status at any time. You can monitor the state of your business’s legal status by using the state’s Filing Notification System. Once you sign up, you will be notified immediately if something has changed.
How to Dissolve an Ohio LLC
Now that you’ve started a business in Ohio, you never know when you might need to dissolve your new business venture. You might decide to cut your losses and move on to another project or you’ve been forced to close your doors due to a lack of income. Whatever the case may be, you need to make sure that you have properly dissolved the company. Otherwise, you might face legal problems including unpaid taxes, failure to comply with the state, and other issues. You will need to terminate any and all tax accounts associated with the business, including state, local, and federal tax accounts. You will also need to file an Article of Dissolution, which stipulates that your business is legally finished.
Foreign LLC in Ohio
If you own a company in another state or country and you’re eager to do business in the state of Ohio, you don’t need to start from scratch. You just need to register your existing company as a Foreign LLC. This means that the state legally recognizes your business as an entity from another region or country. Depending on the nature of your business, you may be expected to pay federal, state or local taxes, as well as the state sales tax if you’re selling goods.
Truly Plan Your Business Idea
Taking the legal and financial steps towards starting a business is one thing, but running a successful business is another matter entirely. Before you open your doors and start doing business with customers, you need to really stop and think about what kind of business you want to create. This may include a mission statement that outlines the goals and objectives of your company and your employees. This might also relate to a specific marketing strategy in terms of public relations and how you plan on reaching customers.
Whatever you come up with, you need to be able to relay the message behind your company in a concise and meaningful way. Whether it’s a pitch to investors or an ad on the subway, your company needs to be instantly recognizable. Talk with your team and figure out what’s working and what’s not. This is one of your last opportunities to workshop your ideas before you introduce yourself to the public.
Having a solid idea in place also allows you to better plan for the future. You will have a more realistic idea of whom you’re selling to, what your potential consumers will think of your company, and what kind of revenue can you realistically expect to achieve. Your ideas affect every aspect of your business from your budget to the overall work environment.
Choose a Business Structure and Register
Putting a business plan together is only half of the battle. Now it’s up to you to choose a business structure. This is more of a legal term than an abstract concept. You will need to register your new business structure with the state. This will affect how much your business will have to pay in taxes as well as your ability to raise funds from investors. Every structure comes with its pros and cons. Think carefully in terms of which structure is best suited to your needs as an entrepreneur. Once you register your business with the state, you will receive some generous tax credits.
Obtain Proper Licensing/Permits
Getting all your permits and business licenses in a row can be challenging depending on where you plan to open your business. Some counties in Ohio are fairly lax when it comes to licensing, while others can impose strict regulations. Considering all the other forms the business owner will need, including federal, state, and local permits, you might want to consider designating one person to oversee permitting and licensing. Make sure that you fill out each form carefully. If there are any issues with your forms, you will have to wait for the state, county or federal government to respond and then reapply with the correct information. All this paperwork can take months, so it’s important to get a head start.
Create a Business Bank Account
You will need to setup a bank account that’s geared specifically for your business. This is also necessary for tax purposes. This is not like signing up for a traditional debit or credit card. You will need to think carefully about what kind of financial institution you want to partner with. Consider what kind of services or features you will need from the bank going forward. Spend some time shopping around your neighborhood for the right bank. You can schedule a meeting and talk to one of the associates about your needs as a business owner. Finding a bank with low or no monthly fees is usually a good place to start. Some banks will require a minimum balance. If your finances are up in the air at the moment, you will want to find a bank with no minimum balance requirements.
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