How to Form an Ohio Corporation in 2023

1) Choose a Name

One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:

Legalities

When naming a corporation in the state of Ohio, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.

Explanatory Naming

In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.

A Name You’re Proud of

Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.

Check whether your preferred name is available: Visit the Ohio Business Name search to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.

Reserve Your Name

The formation process can take some time so it can be a good idea to go ahead and reserve your corporation’s name. You can reserve your name with the Ohio Secretary of State by filling out the Application for Reservation of Corporation Name. You will need to send a check or money order for $39 alongside the form to the following address: P.O. Box 670 Columbus, OH 43216. Once you successfully reserve your name you will have 180 days until your reservation expires.

If you’d like a closer look at how this process works, see our walkthrough guide.

2) Select a Registered Agent

Ohio corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation in step three.

Who can be my Registered Agent?

A registered agent must have a physical address within the state of Ohio where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.

The Ohio Secretary of State says that,

all business entities are required to appoint and maintain a statutory [registered] agent. A statutory agent will be served all legal documents regarding your business entity and is responsible for sharing this information with you.”

Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.

3) Complete Your Articles Of Incorporation

This is THE document that formally registers your corporation with the state of Ohio.

You can file online, or fill out the PDF and send it in via mail.

Keep in mind that you are acting as the incorporator when you fill out and submit the Articles of Incorporation. You should sign as the incorporator before submitting the document.

4) Establish a Corporate Record

Corporations are required under Ohio law to document and keep a permanent record of all important company decisions.  Some things that are required to be kept in the corporate record include:

• Accounts of record
• Minutes of the proceedings of the incorporators, shareholders, directors, and committees of the directors
• Record of the shareholders, including their names and addresses and listing the number and class of shares issued or transferred to them.

The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.

5) Designate a Board of Directors

The incorporator is responsible for selecting the initial director(s) of the corporation.

Unless initial directors were specified in the Articles of Incorporation, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.

The initial directors (no initial directors are required in Ohio) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.

6) Create Corporate Bylaws

Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:

• How shareholders will conduct votes
• The total number of directors and how each director will be elected
• How often the board of directors will meet
• The types of officer roles that will be appointed
• Procedures for resolving internal disputes

Bylaws are not legally required in Ohio, but they are strongly recommended.

Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.

Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of Ohio.

If you’d like a solid framework for creating corporate bylaws, there are plenty of services and free templates available online.

7) Hold First Board Meeting

After designating a board of directors and preparing bylaws, every corporation is legally required to call for an initial board meeting and to have an annual board meeting going forward. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:

• Review and approve corporate bylaws
• Designate officers to manage day-to-day business affairs
• Choose a bank
• Approve issuance of stock certificates
• Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)

Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.

8) Handle Tax Obligations

Federal Requirements

You’ll need a federal tax ID number (EIN) to operate a corporation in Ohio. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN is required for your corporation to hire employees, file corporate taxes, open business bank accounts, and more.

A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:

• C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
• S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.

State Requirements

Ohio does not impose a corporate income tax, unlike almost every other state in the country. Instead, the state levies a Commercial Activity Tax (CAT), but this is only for businesses with taxable gross receipts of $150,000 or more in a calendar year. Other taxes may apply to your business, but these are specific to your business’ activities. They include, but are not limited to gross casino revenue tax, motor fuel tax, kilowatt hour tax, and sales and use tax.

You can register for all your business taxes using the Ohio Business Gateway.

Local Requirements

Your municipality may also have tax requirements. Fortunately, the Ohio Business gateway allows you to electronically register, file and pay municipal income taxes for almost 500 cities and villages. If your municipality is not available through this service, contact your local government to inquire about any taxes. In addition, you can access business resources for Ohio’s five largest cities here:

• Columbus
• Cleveland
• Cincinnati
• Toledo
• Akron

9) Obtain Business Licenses and Permits

To determine any licenses or permits you need to obtain to do business in Ohio, search for your industry using the 1st Stop Business Connection checklists. Selecting your industry will generate a complete checklist of steps you need to take to successfully start your business, including any required licenses and/or permits. Additionally, you can reference our guide for any required permits or licenses.

After you have completed the steps above, do not forget to double-check with your local government to see if there are any other special requirements for your business. The Ohio Business Gateway includes a list of contacts for every municipality, which you can also access here.

10) Acquire Insurance

If employees are part of your business plan, you must acquire workers’ compensation insurance. You can apply for workers’ compensation insurance coverage through the Ohio Bureau of Workers’ Compensation website.

Additionally, you must contribute to the state’s unemployment compensation tax (which provides your employees with unemployment insurance) if you employ at least one person in 20 different weeks for the current or previous year, or if you pay $1,500 or more in wages during any quarter of the current or previous year. To establish an unemployment compensation tax account, register with the Ohio Department of Job and Family Services. You can also find a guide prepared by the Ohio Department of Job and Family Services here.

In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.

11) Open a Business Bank Account

To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.

Failure to successfully keep your personal and business affairs separate could result in a court piercing the corporate veil and you being personally responsible for your corporation’s liabilities. If you need help finding the best business bank account check out our recommendations.

Get Help Forming a Corporation

The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.

Online Incorporation Services

If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.

There isn’t the same level of personalization that a lawyer can provide, but incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.

Ohio Business Attorney

There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your Ohio corporation is the way to go.

If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of Ohio business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.