LLC Cost in Ohio | How Much Does It Cost to Start an LLC

LLC Costs in Ohio

Forming a Limited Liability Company (LLC) in The Buckeye State is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in Ohio. This article will overview the initial and ongoing costs of establishing and running an LLC in Ohio.

If you would like to understand Ohio LLC Costs and to know more about how much it costs to form an LLC in Ohio, read the whole article until the end.

Webinarcare Editorial Team will help you understand how much an LLC Costs in Ohio. You must be guided by all the factors gathered in this article.

Initial LLC Formation Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your Ohio business on a path to success. Some common initial costs associated with forming an LLC include Articles of Organization filing fees, Statutory Agent fees, and additional services, such as business name reservation fees. 

Articles of Organization Filing Fee

The first step in forming an LLC in Ohio is to file the Ohio Articles of Organization with the Ohio Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Statutory Agent. 

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Statutory Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Articles of Organization online, by mail, or in person. A filing fee is associated with this process, which costs around $99. You can also file by mailing it to Ohio Secretary of State, which is located at Ohio Secretary of State, P.O. Box 670, Columbus, OH 43216.

Statutory Agent Fee

An LLC in Ohio must designate a Statutory Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Statutory Agent or appoint someone you know. Professional Statutory Agent in Ohio typically charge an annual fee ranging from $50 – $150.

 In Ohio, your Statutory Agent must:

  • Be a resident of Ohio or a business entity authorized to do business in the state.
  • Have a physical address in Ohio (P.O. boxes are not acceptable)

Choosing a reliable and responsible Statutory Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Statutory Agent or appoint a friend, family member, or professional Ohio Statutory Agent Services.

Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Articles of Organization, you can reserve the business name with the Ohio Secretary of State. 

In Ohio, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.”
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

However, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for some time. You must file a name reservation application in the Ohio Secretary of State to keep the name. 

The online name reservation fee costs around $39, while the mail name reservation fee costs $39.

You can register your business under a different legal name if your preferred name isn’t available.  Once you have chosen a name, you can submit an application for a DBA (doing business as). If you have decided to file for a DBA, you can file it in two methods, by mail and in person. for an easier way.

However, before filing Ohio DBA, you should know that you need to renew your DBA up to five years, which costs around Varies by county

Ongoing LLC Costs

After you know the initial costs of forming an LLC in Ohio, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Biennial Report Filing Fee

To keep your LLC in good standing in Ohio, you must file Biennial Report with the Ohio Secretary of State. The Biennial report provides updated information about your LLC, such as changes in address, members, or Statutory Agent. 

In Ohio, the Biennial report fee costs around $91 which can be paid on 2 years.

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Biennial report filing fee. Franchise tax, or annual tax, is a fee imposed by Ohio on businesses, including LLCs and Ohio Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the Ohio’s specific tax regulations. 

The franchise tax in Ohio costs Ohio does not have a franchise tax for LLCs.

Ohio LLC Taxes To Be Paid

The State of Ohio is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

Ohio Sales Tax

A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In Ohio, the sales tax rate is 5.75%. 

Ohio State Income Tax

Considering other taxes in Ohio, you should pay for the state income tax, which costs 0%; Ohio has no state corporate income tax. 

Ohio LLC Federal Self-Employment Tax

Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.

The self-employment tax consists of the Social Security tax and the Medicare tax. As of 2021, the self-employment tax rate is 15.3%, which consists of:

  • Social Security Tax: 12.4% (applied to the first $142,800 of net self-employment income in 2021)
  • Medicare Tax: 2.9% (applied to all net self-employment income)

Please note that these rates are subject to change, so it’s essential to consult the IRS website or a tax professional for the most up-to-date information. Additionally, some self-employed individuals may be eligible for deductions, which can reduce their taxable income and the amount of self-employment tax they owe.

Ohio Property Tax

The property tax is fixed at 1.56% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your Ohio business and the location of your operations, you may need to obtain a Business License and permits. The costs of these licenses and permits will vary based on your specific business and location. In Ohio, the business license ranges from $50 – $300. However, research the requirements for your LLC in Ohio and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law in Ohio, it is highly recommended that LLCs draft an operating agreement. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a Business Attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

However, if you are wondering how to create an operating agreement, you can check out the Operating Agreement to know and understand how it works.

Professional Services

You may hire professionals such as attorneys, Ohio Accountants, or business consultants to help you establish and run your Ohio LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. Each state has its own fees for filing the Articles of Organization, the primary document required for forming an LLC. These fees typically range from $50 to $500, depending on the state.

However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Articles of Organization yourself. Ohio offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Statutory Agent if permitted within Ohio. Ohio allows the business owner to serve as the Statutory Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What is an LLC?
An LLC is a type of business structure that offers liability protection for its owners.
How much does it cost to form an LLC in Ohio?
The cost to form an LLC in Ohio is $99.
What is the processing time for forming an LLC in Ohio?
The processing time for forming an LLC in Ohio is typically within one week.
Do I need an attorney to form an LLC in Ohio?
No, you do not need an attorney to form an LLC in Ohio.
Can I have a single-member LLC in Ohio?
Yes, you can have a single-member LLC in Ohio.
What are the tax implications of forming an LLC in Ohio?
An LLC can choose to be taxed as a sole proprietorship, partnership, S corporation, or C corporation in Ohio.
Can an LLC in Ohio have multiple owners?
Yes, an LLC in Ohio can have multiple owners.
What is the annual report fee for an LLC in Ohio?
The annual report fee for an LLC in Ohio is $50.
How long does it take to file an annual report for an Ohio LLC?
It typically takes less than 10 minutes to file an annual report for an Ohio LLC.
Is an operating agreement required for an LLC in Ohio?
No, an operating agreement is not required for an LLC in Ohio, but it is highly recommended.
What is an operating agreement?
An operating agreement is a legal document that outlines the ownership structure and operating procedures of an LLC.
Can an LLC in Ohio change its ownership structure?
Yes, an LLC in Ohio can change its ownership structure.
What are the maintenance costs for an Ohio LLC?
The maintenance costs for an Ohio LLC are generally low, including the LLC’s annual report and franchise tax fees.
What is a franchise tax?
A franchise tax is a tax that a corporation or LLC pays for the right to do business in a particular state.
Is a franchise tax required for an LLC in Ohio?
Yes, all LLCs with Ohio as their primary state of business must pay the Ohio franchise tax.
How is the Ohio franchise tax calculated for an LLC?
The Ohio franchise tax is calculated based on an LLC’s net worth.
What is the minimum net worth threshold for an Ohio LLC to be subject to franchise tax?
The minimum net worth threshold for an Ohio LLC to be subject to franchise tax is $25,000.
Can an LLC in Ohio elect to be taxed as an S corporation?
Yes, an LLC in Ohio can elect to be taxed as an S corporation.
Are foreign LLCs subject to Ohio franchise tax?
Yes, foreign LLCs that operated in Ohio are subject to Ohio franchise tax.
What are the advantages of an LLC in Ohio?
LLCs in Ohio offer liability protection, flexibility in management and tax treatment, and protection of your business name.
How long does an LLC last in Ohio?
An LLC in Ohio typically has no designated year for dissolution and generally lasts while business remains viable and owner remains active in membership.
Can I use a home address for my Ohio LLC’s registered office?
Yes, you can use a home address for your Ohio LLC’s registered office.
Can I form an Ohio LLC online?
Yes, you can form an Ohio LLC online through the Secretary of State’s website.
What is an EIN?
An EIN (Employer Identification Number) is a unique identification number assigned by the IRS to businesses.
Do I need an EIN for my Ohio LLC?
You may need an EIN for your Ohio LLC if you have employees.However, it is best to consult a tax specialist as many different factors determine who needs and is eligible for an EIN.
How do I obtain an EIN for my Ohio LLC?
You can obtain an EIN for your Ohio LLC from the IRS.
Is there a fee for obtaining an EIN for my Ohio LLC?
No, there is no fee associated with obtaining an EIN for your Ohio LLC.
Can I change my Ohio LLC’s name after formation?
Yes, you can change your Ohio LLC’s name after formation with an amendment to your LLC’s operating agreement and notification to Ohio Secretary of State.
How can I dissolve my Ohio LLC?
You can dissolve your Ohio LLC by filing a Certificate of Cancellation with the Ohio Secretary of State.
What is the cost of forming an LLC in Ohio?
Currently, the filing fee for an LLC in Ohio is $99.
Are there any other costs associated with forming an LLC in Ohio?
There may be additional costs if you hire an attorney or a formation service to help you with the process.
Do I need a registered agent for my Ohio LLC?
Yes, Ohio law requires that all LLCs have a registered agent.
How much does a registered agent cost in Ohio?
Registered agent fees vary, but you can expect to pay anywhere from $50 to $300 per year.
Is there an annual fee for my Ohio LLC?
Yes, the annual renewal fee for an Ohio LLC is $0.
Can I form an LLC in Ohio myself or do I need to hire an attorney?
While it is possible to form an LLC in Ohio yourself, it is always a good idea to consult with an attorney or professional formation service.
Can non-Ohio residents form an LLC in Ohio?
Yes, any individual or entity can form an LLC in Ohio regardless of residency.
How long does it take to form an LLC in Ohio?
The Ohio Secretary of State typically processes LLC formation documents within three to five business days.
Can I expedite the formation process for my Ohio LLC?
Yes, you can pay an additional fee for expedited service to have your LLC formed in as little as 24 hours.
What are the advantages of forming an LLC in Ohio?
Some advantages of forming an LLC in Ohio include limited liability protection, flexibility in management, and pass-through taxation.
What if I want to dissolve my Ohio LLC?
If you want to dissolve your Ohio LLC, you will need to file a certificate of dissolution with the Ohio Secretary of State.
Can I convert my Ohio LLC to a corporation or vice versa?
Yes, you can convert your Ohio LLC to a corporation or vice versa by filing appropriate documents with the Ohio Secretary of State.
Will my Ohio LLC be taxed as a corporation?
By default, an Ohio LLC is taxed as a pass-through entity, meaning that profits and losses flow through to the owners’ personal tax returns.
How many members can an Ohio LLC have?
An Ohio LLC can have one or more members.
Do I need to obtain any permits or licenses to operate my Ohio LLC?
Depending on the nature of your business, you may need to obtain various permits and licenses to operate in Ohio.
Can I operate my Ohio LLC from my home?
As long as local zoning laws do not prohibit home-based businesses, you can operate your Ohio LLC from your home.
What if I want to register my Ohio LLC in another state?
You will need to register your Ohio LLC as a foreign LLC in any state where you plan to do business.
Can an Ohio LLC have a non-US member?
Yes, a non-US person or entity can be a member of an Ohio LLC.
How do I update the information on file for my Ohio LLC?
You can update your Ohio LLC’s information by filing appropriate documents with the Ohio Secretary of State.
Can an Ohio LLC own stock in other companies?
Yes, an Ohio LLC can own stock in other companies.
Do I need an Operating Agreement for my Ohio LLC?
While an Operating Agreement is not required by law, it is always a good idea to have one in place to spell out the rights and responsibilities of LLC members.
Can I file formation documents for my Ohio LLC online?
Yes, you can file formation documents for your Ohio LLC online through the Ohio Secretary of State’s website.
Can my Ohio LLC be taxed as an S Corporation?
Yes, you can elect to have your Ohio LLC taxed as an S Corporation by filing a Form 2553 with the IRS.
Do I need to file an Annual Report for my Ohio LLC?
No, Ohio does not require LLCs to file an Annual Report.
Can a creditor of my Ohio LLC seize my personal assets?
No, one of the main benefits of forming an LLC is that it allows owners to protect their personal assets from any business liabilities.
What is the Ohio Business Gateway?
The Ohio Business Gateway is a one-stop-shop for businesses to file taxes, access resources, and manage permits and licenses.

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Conclusion

Forming and maintaining an LLC in Ohio involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in Ohio.

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