A Guide on How to Form an LLC in Ohio: Step by Step Process

When you decide to start a new LLC in Ohio there will be a list of guidelines you will need to follow to make sure you are setting your business up in a way that meets these requirements. To do this, it helps to have a checklist of requirements you will need to complete. Typically this list will include:

1. Choosing a Business Name - Your business name will need to be unique and distinguishable enough from other active businesses in the state, and include a designator in it such as "LLC" or "Limited Liability Company".

2. Appoint a Statutory Agent - All LLCs in Ohio will need to have an active statutory, or registered agent appointed to their business. They are responsible for receiving any service of process or important documents sent to them by the state.

3. Submit your Articles of Organization - This form will be what officially registered your business with the Ohio Secretary of State and will include your general business information.

4. Draft an operating agreement - Operating agreements will define the roles and responsibilities of the business owners and internally govern how the business operates.

5. Obtain an EIN - This will be issued to your business by the IRS and will be needed for activities such as filing taxes, hiring employees, or opening a business bank account.

6. Open a business bank account - A separate bank account for your LLC ensures there is no mixing of funds from your personal assets to your business assets and continues the liability protection that is provided to LLC owners in Ohio.

7. Maintain ongoing good standing - Keeping your business in good standing will ensure there are no extra fees imposed on your business and make sure you are able to continue to operate legally in the state of Ohio.

This guide will provide tips and guidelines for how to form a new Ohio LLC, and give a step by step guide for new business owners for completing this process. You can choose to either complete this on your own or you hire a service like Firstep to take care of this for you so you can focus on getting your business up and running. If you do choose to do this on your own, our guide will cover the most important things you will need to do and the best order to complete these in.

Step 1: Choosing a Business Name

The first step of forming a new LLC in Ohio will be to choose a business name. This will be the first thing potential customers see when they interact with your business so it can be helpful to have a name that relates to the products or services that your business offers. This also makes it easier for customers to remember your name and what your business does, which can improve retention and the amount of repeat customers you are able to get. In Ohio, it is required for your name to be unique and distinguishable enough from other active businesses in the state to avoid confusion for customers and to make sure there are not any businesses that have the same or very similar names. For a detailed guide on what makes these names distinguishable enough from other business names, see the Ohio Secretary of State naming guide here.

A brainstorming session can be a great thing to do when you are trying to come up with potential names, and using the business name search tool on the Ohio Secretary of State website can be used while doing this to ensure the names you come up with are not currently in use by other businesses in the state. Also, you can read the name availability guide the Secretary of State has available to know what will be considered unique enough from other businesses that are already registered in the state. Ohio will hold names of businesses that have been administratively dissolved for up to one year, so if a business is showing as inactive you need to look at when they went inactive to see if the name is actually available or not. Your business name will also need to include a designator in it such as "LLC" or "Limited Liability Company" in order to be approved.

Step 2: Appoint a Statutory Agent

All Ohio LLCs will be required to have an active and current statutory agent for their business. Commonly referred to as a registered agent, this person will be responsible for receiving any service of process that is sent to your LLC, as well as important notices sent by the state. The person in this role will be over the handling of any lawsuits or judgements on the business, and if your agent misses these notices it can lead to default judgements which are more often than not a costly and unfavorable outcome. The person you appoint as your registered agent can be anyone, but they will be required to meet certain requirements to be approved in this role. These requirements include the following:

• Be at least 18 years old

• Have an active physical address in the state of Ohio

• Be available at this listed address during regular business hours (Monday-Friday 9am-5pm)

You can choose to be your own registered agent, choose a trusted friend or family member, or you can hire a service like Firstep to act as your agent. Each option has its pros and cons so you will need to determine which option is best for your specific situation. It's important to be aware of the fact that your registered agent information will be listed on your Articles of Organization which is public information. If you would like to avoid having your personal address listed on this document you are able to choose someone else or you can hire a service to do this. Also, if you are a mobile business or have multiple locations it can be difficult to actually be at your listed address during regular business hours.

Step 3: Submit Your Articles of Organization

Now that you have chosen your LLCs business name and you have a valid registered agent, you are ready to officially form your LLC in Ohio by submitting your Articles of Organization. This will be done by first going to the Ohio Secretary of State website and choosing the option to file a new business. Once here, you can check the name availability once again to make sure the name you would like to use is available. After ensuring you are able to use your chosen name, you will need to enter the following information:

• Enter the name of your business including a designator

• Choose the effective date and, if applicable, fill out the purpose clause

• Enter the statutory agent's name, address, email, and sign that the agent accepts this appointment to your business.

• Add any attachments that you would like to be submitted along with your filing

• Sign the document authorizing the formation of the LLC

• Proceed to the review page and ensure all the information you have entered is correct and there are no typos

• You will then preview the Articles of Organization and be taken to the payment page

The total cost to submit your Articles of Organization and officially form your LLC in Ohio will cost $99. After paying this fee, your document will go into the review phase which typically will take the Ohio Secretary of State around 3-5 business days. Once approved, you will receive an email to the email address given during the formation process that informs you of the approval as well as containing the Articles of Organization for you to download. Firstep is also able to submit your Articles of Organization on your behalf to ensure this form is filled out correctly. Be sure to save this document to a safe place where you can easily access it as you will most likely be required to provide this when doing certain business activities such as opening a business bank account.

Step 4: Draft an Operating Agreement

After you have submitted your Articles of Organization and gotten notice of the approval, a suggested next step will be to draft an operating agreement. Although an operating agreement is not legally required, they are highly recommended for LLCs to have because they outline the roles and responsibilities of the owners of the business, govern the internal policies of the business, assign voting rights to members, and detail the processes for decision making within the business. Also, the operating agreement will determine the process of how members contribute to the LLC, and how they join or leave the business.

Having an operating agreement can help settle internal disputes between members and avoid these disputes by having their roles clearly outlined. Although this document is not filed with any government agency, having one for your LLC is very beneficial to the success and longevity of the business. You can update this document as your business grows and your needs change, just be sure to keep the most recently updated version saved to ensure there is no confusion.

Step 5: Obtain an EIN

Now that your LLC is formed and approved an important next step will be to obtain an EIN, or employer identification number, from the IRS. This number will act as a social security number for your business and will be used for important activities like filing taxes, hiring employees, or opening a business bank account. These are issued to you by the IRS, and each business will only be issued one EIN. It will not need to be renewed so once you get your EIN you will have the same number throughout the lifespan of your business.

It's important to make sure that during the process of filling out your EIN information with the IRS that you are entering all the information exactly as it appears on your Articles of Organization to make sure this number is issued to the right business. You can choose to either obtain this number on your own or you can have Firstep complete this process for you during the formation of your LLC.

If you have already gotten an EIN and forgotten the number or lost the documentation for it you can still retrieve this from the IRS, although this process can take much longer than initially getting one. As mentioned before, each business will only get one EIN number so if you forget the number or lose it you can not just submit an application for a new one. The IRS has specific forms you will need to fill out to prove you are an authorized member of the business and submit business information along with that so the EIN you get is for the correct business. Similar to initially getting an EIN, you can either choose to do this on your own or you can have Firstep retrieve this for you. Be aware this process can vary widely in processing times, so you will want to get this started before it gets close to tax season or you plan to hire any employees.

Step 6: Open a Business Bank Account

Once you have formed your LLC and gotten the necessary documents along with it, you will more than likely need to set up a business bank account for your LLC. This will be mainly used to keep a clear separation between your personal and business finances and make it easier to track your cash flow of the business. As an LLC owner, you will be granted liability protection that protects your personal assets like your home, retirement, and savings accounts from any debts incurred by your business. However, this protection will only be enforced in these cases if your LLC is legally operating which means you will need to keep your personal and business finances separate and not engage in any illegal activities by your LLC.

Commonly referred to as the corporate veil, this shield is used to keep your assets safe. Once the corporate veil is pierced then any lawsuits or business debts will be able to go after your personal assets as well. A business bank account ensures all finances are separated and also adds credibility to your business when dealing with outside investors, vendors, or partners. Instead of having vendors make payments out to you personally, they are able to make them out to your business which is a more professional look for your business.

The protection of your personal assets, the added credibility, and the easy tracking of your business finances are all advantages of setting up a business bank account. This is especially important once your business grows and is dealing with larger amounts of money as the separate business bank account allows you to easily track expenses, file taxes, and keep your finances separate.

Step 7: Maintain Ongoing Good Standing

Now that your LLC has been formed and you have acquired all the necessary documents you will need to keep your business in good standing to stay operating as an active business. As opposed to many other states, Ohio does not require LLCs to submit annual reports to maintain their good standing. However, you are required to keep your statutory agent up to date and all information accurate that relates to them. If there are any changes to this information you will need to update it with the Secretary of State in case there is anything that needs to be sent to your business.

Additionally, you may need to register for certain business licenses that are required by businesses in your industry. There is no general business license, but specific industries such as healthcare, law, insurance, construction, and other specialized services might be required to register for these depending on their local guidelines.

FAQs on LLCs in Ohio

Where should I go to form an LLC in Ohio

To start an LLC in Ohio you will need to go to the Ohio Secretary of State business website and navigate to the forms tab. You can submit your Articles of Organization online, which will tend to have the fastest processing times.

What do I do if I don't have anyone to appoint as my statutory agent

If you don't have a statutory agent to list for your business there are a few options available to you. You can choose to act as your own agent, although your listed address will be public information. Another option will be to hire a statutory agent service like Firstep to serve in this role to maintain both your good standing and your privacy.

Does Ohio have annual report requirements

No, unlike many other states Ohio does not require LLCs to submit annual reports each year. But, there are still requirements for businesses regarding business licenses and taxation you still must adhere to.

Can I form an LLC in Ohio even if I don't live in the state

Yes, you can still form an Ohio LLC if you don't live in the state. However, you will still need to have an active statutory agent that has an active physical address in Ohio to ensure you are meeting all the guidelines in place by the Secretary of State.