Think about your LLC a year from now: raking in profits and taking Ohio by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Ohio.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Ohio startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Ohio
Optional: LLC Name Reservation Fee
- $39 for online or hard copy filings
Required: Articles of Organization Fee
- $99 for online or hard copy filings, with three expedited processing options: two-day for $100, one-day for $200, and four-hour for $300
Overall Ohio LLC Formation Costs
LLC Name Reservation Fee
First things first: reserving a business name is not required to start your LLC in Ohio. Even though it isn’t mandatory, if you have a great business name but aren’t ready to start your business, it’s a good option to have. Submitting a Name Reservation form and paying the $39 fee will give you sole ownership of your desired name for 180 days. But if you’re ready to start your LLC go straight to filing the Articles of Organization instead, as that will automatically register your name.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Ohio LLC. In the eyes of the state, a business without an Articles of Organization isn’t a business at all and, more importantly, it’s not allowed to do business in the state. So, as soon as you can you’ll want to file online or using a paper form. The filing fee is $99 for either method. While it’s a dent in the budget, you only file the Articles of Organization once, so you won’t have to pay this fee again.
Business and Professional Licenses
Your articles of Organization are on the record, but you might not be ready to commence business just yet. Some businesses may require additional licensure before doing business in Ohio. For example, landscape architecture businesses must obtain a license from the state’s Landscape Architecture Board and real estate agents need one from the Department of Commerce.
On top of that, many cities and/or counties have their own specific licensure requirements. Your LLC may need multiple licenses, and it may not need any. Check with Ohio’s Licenses & Permits webpage, as well as your local government to find out.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Statutory Agent Service
Appointing a statutory agent is an important part of your LLC formation process. Your statutory agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Ohio business law. In short, you need an agent you can trust.
While you can be the statutory agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A statutory agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all statutory agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to statutory agent services, Northwest also handles LLC formation — and they’ll include a statutory agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Statutory Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. There’s no shortage of great business lawyers. The hard part is finding the right one. A site like Avvo can help by providing access to an entire database of Ohio business attorneys, so you can research and compare rates, areas of expertise, and more to help you hire a great fit for your LLC.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Ohio. Does this describe your business? If so, forget the Articles of Organization. Instead, you’ll be filing the “Registration of a Foreign LLC.”
All foreign business entities are required to foreign qualify in Ohio, or they could incur some pretty severe penalties. Before you start doing business, foreign qualify by submitting the Registration of a Foreign LLC online or by mail. It costs $99, but like the Articles of Organization, you only have to file it once.
LLC Annual Fees
Most states require their businesses to complete annual or biennial reports to update their information, but Ohio is one of the few states that doesn’t. So, you won’t have to worry about meeting a deadline and paying an annual report fee each year. But you’ll still want to make sure that you’re updating the Secretary of State’s office on any changes to your business, like a new statutory agent or registered office. Otherwise, you might run into some fines or penalties.
Since LLCs are considered “pass-through” entities, yours won’t owe the federal government a corporate income tax. Rather, the owners and/or members will report income and losses on their personal tax returns.
At the state level, Ohio imposes a Commercial Activity Tax on any business entities with gross annual receipts of $150,000 or more. The rate is 0.26% of an LLC’s gross annual receipts and you can register through the Ohio Business Gateway. Learn more on the Department of Taxation website.
If your LLC sells merchandise, it will be subject to a Sales and Use Tax, and if it maintains employees, it will need to pay WIthholding and Unemployment taxes. You can register for all any applicable taxes on the Ohio Business Gateway linked above.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Even though Ohio doesn’t require Annual Reports, there are still serious penalties for failing to make other necessary filings and pay required taxes. If you don’t file the Articles of Organization or Registration of a Foreign LLC, you won’t be able to commence business in the state. If you don’t keep a valid statutory agent on file, the state can revoke your Articles of Organization. Fail to pay the Commercial Activity Tax and you’ll incur a penalty of 10% of the amount due.
Plus, missing any required filing or tax will cause your LLC to lose its good standing with the state. Any company without good standing cannot foreign qualify in most other states, apply for business loans, renew many professional licenses, and more.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Ohio.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like the Commercial Activity Tax – so your business doesn’t fall out of good standing.