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.
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.
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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. It’s worth noting that canceling or transferring a reserved business name costs only $25.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform an Ohio business name search to make sure the name you want is available.
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.
The information you’ll need to file your Articles of Organization includes an indication that your LLC is a for-profit or nonprofit company, the official business name of your LLC, the effective date of your LLC formation (if applicable), the duration of your LLC (if applicable), the name and address of your statutory agent, your statutory agent’s signature, and the names and signatures of each person with “authority to execute this document.”
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.
What are some of the most commonly required business licenses for Ohio LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Website
Starting an LLC in Ohio 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 website. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (which are often frequently used LegalZoom alternatives) offer LLC registration services 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 an Ohio statutory agent (also commonly known as a registered 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, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
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 $500-2,000.
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.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Ohio. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
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.
For more information about Ohio LLC maintenance requirements, check out our article on the subject.
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 any applicable taxes on the Ohio Business Gateway linked above.
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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.
Key Steps for Starting an Ohio LLC
- The first step to forming an Ohio LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your statutory agent. While you can legally serve as your own statutory agent in Ohio, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable statutory agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $99 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Ohio LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Ohio Department of Taxation, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Ohio!
Key Steps for Maintaining an Ohio LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Ohio.
What are the state business tax rates in Ohio?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 0% and 4.797%, depending on your income level). If your LLC is taxed like a corporation, you will need to pay the state’s gross receipts tax or “Commercial Activity Tax” of 0.26% on all gross receipts exceeding $1 million.
How quickly does Ohio process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 3-7 business days. If you’re in a hurry, you can pay an expediting fee to speed up the process. An extra $100 gets two-day service, $200 gets one-day service, and $300 gets four-hour service.
How many small businesses are there in Ohio today?
The state of Ohio is home to more than 850,000 small businesses. Entrepreneurs of all backgrounds and business types find that Ohio is a great place to own and operate a small business.
What are the top small business resources and websites in Ohio?
The Ohio chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Ohio LLCs. The U.S. Small Business Administration’s Ohio District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in Ohio, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.