Starting a Corporation in Ohio | What You Need to Know

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Start a Corporation in Ohio

In Ohio, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Ohio, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Ohio.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

How to Start a Corporation in Ohio

What is a Corporation in Ohio?

A corporation in Ohio is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Ohio are required to have at least Three directors. One of the main advantages of a corporation in Ohio is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Ohio is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Ohio if you would like to provide limited liability protection to your shareholders rather than Ohio LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in Ohio

To start a corporation in Ohio, you must follow the below steps that, include choosing a corporate name, hiring a Statutory Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Ohio naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Ohio-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Ohio Secretary of State‘s business name database and Business Name Search in Ohio. If the name is available, you may choose to reserve it for a specific period of some time by filing a name reservation application and paying the online name reservation fee of $39 and mail name reservation fee of $39. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around Varies by county. In addition, the DBA’s validity in Ohio is five years, which you can file in Ohio Secretary of State.

You can check out How to File a DBA in Ohio for clearer understanding.

Step 2: Hire a Statutory Agent

Hiring a Statutory Agent is essential in starting a corporation. Statutory Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Ohio Statutory Agent Services to check in forming Ohio Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in Ohio are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Ohio, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Ohio corporation, the next step is to write and file a Articles of Incorporation. In writing, the Ohio Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Statutory Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Ohio corporation, you must prepare and file Articles of Incorporation with the Ohio Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Ohio Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Ohio, the Articles of Incorporation filing fee costs around $99 for online and by mail filing. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail or drop it off at Ohio Secretary of State, P.O. Box 670, Columbus, OH 43216

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Ohio, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Ohio corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Ohio corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Ohio are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • Ohio Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Ohio licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Ohio corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Ohio for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Ohio corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Ohio can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Ohio Department of Taxation for guidance on your specific obligations.

Step 11: Biennial Reporting and Ongoing Compliance

Once your Ohio corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Biennial Report with the Ohio Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Ohio

Even if you have established your corporation in Ohio, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Ohio has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Ohio are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Ohio

In forming a corporation in Ohio, a filing and Biennial fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Ohio, it costs $99 for online and by mail filing. The corporation in Ohio also has to file an Biennial Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is the process of forming a corporation in Ohio?
The process involves submitting Articles of Incorporation to the Ohio Secretary of State.
What are the requirements for registering an Ohio corporation?
The corporation must have at least one incorporator who is at least 18 years old and a resident of Ohio or has a registered agent in the state.
Can a corporation operate from multiple states, including Ohio?
Yes, corporations can operate in multiple states, including Ohio.
Can an Ohio corporation have non-resident shareholders and directors?
Yes, there are no residency requirements for shareholders or directors of Ohio corporations.
How much does it cost to form an Ohio corporation?
The filing fee for Articles of Incorporation is currently $125.
How long does it take to form an Ohio corporation?
The Ohio Secretary of State’s office can take up to five business days to process the Articles of Incorporation.
Do I need to register my Ohio corporation for state taxes?
Yes, Ohio corporations must register for state taxes if they have employees or conduct business in Ohio.
What types of corporations can be formed in Ohio?
Ohio offers standard C corporations, S corporations, and limited liability companies (LLCs).
What is an Ohio registered agent?
An Ohio registered agent is a person or business who is authorized to receive legal documents on behalf of an Ohio corporation.
Can I be my own Ohio registered agent?
Yes, you can be your own Ohio registered agent if you have a physical Ohio address.
Do I need to provide publication notice when forming an Ohio corporation?
No, Ohio does not require publication notice when forming a corporation.
What is the franchise tax for Ohio corporations?
Ohio’s franchise tax is currently $150 per year.
What is the benefit of forming an Ohio corporation?
Corporations protect personal assets and taxes, allow businesses to raise funds, and protect a business name.
Can I change the name of an Ohio corporation?
Yes, you can change the name of an Ohio corporation by amending its Articles of Incorporation.
How often does an Ohio corporation need to file an annual report?
Ohio corporations must file an annual report every year between January 1 and April 1.
What information is required for an Ohio corporation’s annual report?
Ohio corporations must provide basic information, including their name, type of business, and registered agent.
Can I add directors or shareholders to an Ohio corporation later?
Yes, it is possible to add directors or shareholders to an Ohio corporation at a later date.
How does an Ohio corporation issue stock?
An Ohio corporation must issue shares of stock according to its approved Articles of Incorporation.
What is a Ohio corporate bylaw?
A corporate bylaw is a set of rules governing an Ohio corporation’s internal management.
Can bylaws be amended in Ohio?
Yes, Ohio corporations can amend their bylaws by a vote of the board of directors.
What is an Ohio corporate seal?
An Ohio corporate seal is a physical stamp used to authenticate legal documents issued by an Ohio corporation.
Is an Ohio corporate seal required by law?
No, Ohio does not require corporations to have a corporate seal.
How can an Ohio corporation legally conduct business in other states?
An Ohio corporation can apply for authorization to do business in other states by registering as a foreign corporation.
What is Ohio capital stock tax?
The Ohio capital stock tax is a state tax on the shares of a corporation’s capital stock.
How is Ohio capital stock tax calculated?
Ohio capital stock tax is calculated as a percentage of a corporation’s net worth.
Do Ohio corporations need to file for local and federal taxes?
Ohio corporations are subject to the same federal and local tax requirements as any other business.
What are the requirements for holding shareholder meetings for Ohio corporations?
Ohio corporations must hold at least one shareholder annual meeting.
Can the directors of Ohio corporations receive compensation?
Yes, directors of Ohio corporations may receive compensation for their services.
Can Ohio corporations offer employee stock options?
Yes, Ohio corporations can offer stock options to their employees as a form of compensation.
What do I need to do to start a corporation in Ohio?
You will need to file Articles of Incorporation with the Ohio Secretary of State’s office.
What information will I need to supply for filing Articles of Incorporation?
You will need to provide your corporation’s name, address, purpose, and the names and addresses of its shareholders, officers, and directors.
Is there a fee for filing Articles of Incorporation?
Yes, the filing fee is $99.
How long does it take for the Ohio Secretary of State to process my Articles of Incorporation?
It typically takes two to three business days.
Do I need to have a registered agent in Ohio to start a corporation there?
Yes, Ohio law requires that each corporation have a registered agent in the state.
Can I serve as my corporation’s registered agent in Ohio?
Yes, but you may also hire a professional registered agent.
Do I need to obtain any licenses or permits to start a corporation in Ohio?
That depends on your corporation’s purpose. Check with the Ohio Secretary of State and the applicable state and local agencies.
When does my corporation legally exist in Ohio?
Your corporation exists upon approval of your Articles of Incorporation.
Do I need to file periodic reports with the Ohio Secretary of State after my corporation is formed?
Yes, Ohio corporations must file annual reports.
What is the deadline for filing an Ohio corporation’s annual report?
The deadline is the fifteenth day of the fourth month after the corporation’s fiscal year end.
What is the cost of filing an Ohio corporation’s annual report?
It costs $50 to file an annual report in Ohio.
Do I need to obtain an Ohio tax ID number for my corporation?
Yes, you will need a tax ID number if your corporation has employees or is engaged in certain types of business.
How do I obtain an Ohio tax ID number?
You can apply online at the Ohio Business Gateway.
What taxes does an Ohio corporation need to pay?
Ohio corporations are subject to corporate income tax, sales and use tax, and employment taxes.
Is an Ohio corporation required to register for sales and use tax if it makes only occasional sales in the state?
No, registration is required only if a corporation makes taxable sales regularly in Ohio.
Are there any tax incentives available to Ohio corporations?
Yes, Ohio offers a variety of incentives, such as tax credits and exemptions, job creation tax credits, and other investment programs.
Does Ohio have a capital stock tax?
No, Ohio does not impose a capital stock tax.
What is the annual fee for an Ohio corporation?
The fee varies depending on the corporation’s authorized shares, value, and Ohio location.
Does Ohio recognize the single-member LLC?
Yes, Ohio does recognize single-member limited liability companies (LLCs).
Does Ohio allow domestications of out-of-state corporations to Ohio?
Yes, Ohio allows for domestications of out-of-state corporations.
Can an Ohio corporation be dissolved voluntarily?
Yes, Ohio corporations may voluntarily dissolve by filing the appropriate forms with the Ohio Secretary of State.
What happens if an Ohio corporation fails to file an annual report on time?
The corporation may face penalties and even be administratively dissolved.
Is there a grace period for filing an Ohio corporation’s annual report?
No, there is no grace period for filing an annual report.
When must an Ohio corporation file for re-instatement following administrative dissolution?
The corporation must apply for reinstatement within five years of its administrative dissolution.
Are there any annual reporting requirements for Ohio nonprofits?
Yes, Ohio nonprofits must file annual reports with the Ohio Attorney General’s office.
Is Ohio a corporate shareholder state?
Yes, Ohio allows corporations to act as shareholders in other corporations.
Who is responsible for initially organizing an Ohio corporation?
Organizers playing important roles in forming new Ohio companies typically are the corporation’s founders, legal advisors, and board members.
How can Ohio bi partisan General Assembly work together?
Legislators in Ohio are typically willing to reach across the aisle and collaborate to pass laws, even despite their political differences.

Also Read

How to Save Money While Forming Your Ohio Corporation

Luckily, there are several ways to save money while forming your Ohio corporation without sacrificing the protection and benefits that come with this legal structure. By being strategic and resourceful, you can navigate the process more affordably and efficiently.

One of the most significant expenses when setting up a corporation is hiring a lawyer to handle the paperwork and filings. While legal guidance is crucial to ensure that your corporation is formed correctly, there are ways to save money in this area. Consider using online legal services or document preparation companies to help you with the necessary paperwork at a fraction of the cost of hiring a traditional attorney. These resources can guide you through the process step by step and help you complete the necessary forms to file with the state.

Another way to save money while forming your Ohio corporation is to handle the paperwork yourself. While this may seem daunting, the Ohio Secretary of State’s website provides comprehensive guides and resources to help you understand the required steps and forms. By dedicating some time and effort to research and complete the paperwork yourself, you can save on legal fees and ensure that you have a solid understanding of the legal requirements for your corporation.

Choosing a registered agent for your Ohio corporation is another area where you can save money. While there are services that offer registered agent services for a fee, you can also appoint yourself or a trusted individual as the registered agent for your corporation. This simple step can save you money on ongoing registered agent fees and provide you with more control over this important aspect of your business.

When it comes to tax considerations, forming an Ohio corporation can offer potential savings and benefits. By electing S-Corporation status for your corporation, you may be able to reduce your tax liability and save money on self-employment taxes. Consulting with a tax professional or accountant to understand the tax implications of forming a corporation can help you make informed decisions that align with your financial goals.

Lastly, leveraging online resources and tools can help you save money during the formation process. From free templates for legal documents to affordable business planning software, there are numerous resources available to assist you in setting up your Ohio corporation efficiently and cost-effectively. By utilizing these tools and resources, you can streamline the process and focus your financial resources on growing your business.

Forming an Ohio corporation may seem like a daunting and expensive endeavor, but with careful planning and research, you can save money and overcome the financial obstacles that may stand in your way. By being resourceful, strategic, and proactive in your approach to forming your corporation, you can achieve your entrepreneurial dreams while staying on budget.

Conclusion

Starting a corporation in Ohio involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Ohio corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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