Forming a Single-Member LLC in Ohio | A Guide For Business Owners

Forming a Single-Member LLC in Ohio

If you would like to start an LLC in Ohio, also known as The Buckeye State, there are a few things that you should consider. In Ohio, putting up a single-member limited liability company (LLC) will benefit you and your business since it protects your assets, and maintain good standing. It also combines a corporation’s limited liability protection with a sole proprietorship’s simplicity and flexibility.

In this article, Webinarcare Editorial Team will walk you through the step-by-step process of forming a Single-Member LLC in Ohio and provide valuable tips to help you succeed in your entrepreneurial journey.

Understanding Single-Member LLCs

A single-member LLC in Ohio is a business entity with only one owner, also known as a member. This business structure offers several advantages, including limited liability protection, pass-through taxation, and ease of management. In Ohio, single-member LLCs are subject to state-specific regulations and requirements, which may vary from other states. The formation process typically involves choosing a unique business name, registering with the Secretary of State, and completing other required steps to comply with Ohio laws and regulations.

A Limited Liability Company is subject to state-specific regulations and requirements, which we will cover in this guide. Before that, we reviewed some of the Best LLC Services for you to check out.

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It is suggested that you speak with a legal professional before you begin setting up your single-member LLC. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC for your business.

WEBINARCARE EDITORIAL TEAM

How to Form a Single-Member LLC in Ohio

To form a single-member LLC for your business, you must follow the guidelines, including research and planning, registering your single-member LLC, establishing your business operations, and maintaining compliance with Ohio regulations.

Step 1: Research and Planning

Before you can form your single-member LLC in Ohio, conducting thorough research and creating a solid business plan is crucial. This stage involves the following steps:

Research State-Specific Requirements

Each state has its own regulations for maintaining and forming an LLC. To ensure you comply with Ohio law, familiarize yourself with the state’s LLC requirements, such as filing fees, Biennial Report requirements, and ongoing compliance obligations.

Choose a Business Name

Selecting a name for your LLC is an essential part of the formation process. Your business name should be unique, memorable, and reflective of your products or services. There is a complete guide on Business Name Search in Ohio for you to have a proper LLC business name. 

In Ohio, your single-member 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

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 with the Ohio Secretary of State to keep the name. 

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). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA in Ohio, you can file it in two methods, by mail, and in person.

However, before filing a DBA, you should know that you need to renew your DBA for up to five years, which costs varies by county. You can check the availability of your desired business name by searching the Ohio Secretary of State Business Search‘s website.

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Determine Licensing and Permit Requirements

Depending on the nature of your business, you may need to obtain certain licenses and permits to operate legally. Research the specific requirements for your industry in Ohio by consulting the state’s business licensing portal, contacting your local Chamber of Commerce, or seeking advice from Ohio Business Attorney.

Create a Business Plan

A well-crafted business plan will guide your single-member LLC’s growth and success. Your business plan for your Ohio single-member LLC should cover key aspects such as:

  • Executive summary
  • Company Description
  • Market Analysis
  • Competitive Analysis
  • Products and Services
  • Marketing and Sales Strategy
  • Organizational Structure
  • Financial Projections

Step 2: Registering Your Single-Member LLC

Once you have completed the initial research and planning, it’s time to register your single-member LLC with the Ohio Secretary of State. Here are the steps involved:

File the Articles of Organization

To officially form your single-member LLC in Ohio, you must file the Ohio Articles of Organization with the Ohio Secretary of State. 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 registered 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.

Appoint a Statutory Agent

A Statutory Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LLC. 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)

It’s essential to choose a reliable and responsible Ohio Statutory Agent, as failure to receive and respond to legal documents can have serious consequences for your business. 

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

Obtain an Employer Identification Number (EIN)

An EIN, also known as a Federal Tax Identification Number, is used by the Internal Revenue Service (IRS) to identify your business for tax purposes. You’ll need an EIN to open a business bank account, file taxes, and hire employees (if necessary). 

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 the 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.

In obtaining Ohio EIN for your single-member LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

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Register Your Single-Member LLC

If your single-member LLC will collect sales tax, have employees, or be subject to certain state taxes, you may need to register with the North Dakota Secretary of State. Check the department’s website or consult a tax professional for specific registration requirements.

Step 3: Establishing Your Business Operations

With your single-member LLC officially registered in Ohio, you can now focus on setting up the operational aspects of your business.

Open a Business Bank Account

Opening a separate bank account for your Ohio single-member LLC is essential for maintaining a clear separation between your personal and business finances. This separation helps preserve the limited liability protection offered by the LLC structure. You can check out the Best Banks in Ohio, which offer the best fees, services, and convenience for your business needs.

Set Up an Accounting System

Effective financial management is crucial for the success of your single-member LLC. Establish a reliable accounting system to track income, expenses, and tax obligations. You can manage your finances using spreadsheets and accounting software by becoming a CPA in Ohio.

Create an Operating Agreement

Although not required by Ohio law, it’s highly recommended that you create an operating agreement for your single-member LLC. This document outlines your LLC’s management structure, decision-making process, and ownership rights. A clear Ohio Operating Agreement can prevent disputes and provide a framework for managing your business.

The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 4: Maintaining Compliance with Ohio Regulations

Once your single-member LLC is up and running, staying informed and compliant with state regulations is essential. Here are some key ongoing requirements for LLCs in Ohio:

File Biennial Report

LLCs must file Biennial Report with the Ohio Secretary of State. This report typically includes updated information about your LLC, such as its business address, Statutory Agent, and member information. 

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

Pay Required Taxes and Fees

As a single-member LLC, your business income will be subject to pass-through taxation, meaning profits and losses will be reported on your personal tax return. However, you may still be responsible for other state taxes, such as sales tax, payroll tax, or franchise tax which you can pay in Ohio Department of Taxation.

In terms of franchise tax for your single-member LLC in Ohio, there is No franchise tax. Consult a tax professional to ensure you meet all your tax obligations.

Maintain Accurate and Up-to-Date Records

Keeping detailed records of your single-member LLC’s transactions, meetings, and decisions is crucial for maintaining compliance with state regulations and protecting your limited liability status. Regularly review and update your records to accurately reflect your business activities.

Cost of Forming a Single-Member LLC in Ohio

Even if you have a business name and structure in mind, consider whether you can afford the costs of forming an LLC in Ohio. Articles of Organization costs around $99. The initial filing fee is $99, and the annual fee is $91. 

If you forget to pay the annual fee for your Ohio LLC, you will have a penalty of $0 (not required). However, you can check the Ohio LLC Cost for additional information. 

Advantages of Starting a Single-Member LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via single-member LLC in Ohio. These advantages will help establish a single-member LLC in Ohio. 

  • Limited Liability Protection: One of the primary advantages of a single-member LLC is the limited liability protection it provides to its owner. This means that the owner’s personal assets, such as their home and personal savings, are protected from the debts and liabilities of the business. In the event of a lawsuit or financial loss, only the assets owned by the LLC are at risk.
  • Pass-Through Taxation: Single-member LLCs enjoy pass-through taxation, meaning that the business profits and losses are reported on the owner’s tax return. This avoids the double taxation that traditional corporations face, where the company and the owner are taxed separately on the same income.
  • Simplified Management: Single-member LLCs have a simplified management structure compared to other business structures. The owner has full control over the business’s decision-making process and day-to-day operations without needing a board of directors or complex corporate formalities.
  • Flexibility in Business Operations: Single-member LLCs offer flexibility in terms of operational and management structures. The owner can operate the business as a sole proprietor while benefiting from an LLC’s limited liability protection.
  • Credibility: Forming a single-member LLC can enhance the credibility of your business in the eyes of potential customers, suppliers, and financial institutions. An LLC designation can make your business more professional and established than a sole proprietorship.

FAQs

What does LLC stand for?
LLC stands for Limited Liability Company.
Is the formation of a single-member LLC the same process in every state?
No, the process can vary from state to state.
Do I need to have a physical office in Ohio to form a single-member LLC there?
No, a physical office is not required. The LLC can be formed using a PO Box.
How long does it take to form an LLC in Ohio?
It typically takes 3-5 business days to form an LLC in Ohio.
What is the cost of forming an LLC in Ohio?
The filing fee to form an LLC in Ohio is $99.
Can a non-US resident form an LLC in Ohio?
Yes, non-US residents are allowed to form LLCs in Ohio.
Can an LLC have different members from different states?
Yes, an LLC can have members from any state or country.
Do I need a lawyer to form an LLC in Ohio?
No, a lawyer is not required. You can file the paperwork yourself.
Is an operating agreement required for an LLC in Ohio?
Ohio does not require an operating agreement for an LLC, but it is highly recommended.
Can an LLC have just one owner?
Yes, a single-member LLC is a common structure.
Do I need to file for a separate tax ID for my LLC in Ohio?
Yes, the IRS requires all LLCs to have a separate tax ID number.
Does forming an LLC protect my personal assets?
Yes, the LLC structure provides limited liability protection to its owners, helping shield personal assets from business liabilities.
Can an S corporation be a single-member LLC in Ohio?
No, an S corporation cannot have an LLC as a member.
Does the state of Ohio require a business license for an LLC?
It depends on the business activities of your LLC. Many activities require licensing, but some may not.
Can a foreign LLC do business in Ohio?
Yes, foreign LLCs are allowed to operate in Ohio after registering with the Secretary of State.
Is there a publication requirement for an LLC in Ohio?
No, there is no publication requirement in the state of Ohio.
Can an LLC choose to be taxed as an S corporation in Ohio?
Yes, an LLC can elect to be taxed as an S corporation if it meets certain criteria.
Is there an annual report requirement for an LLC in Ohio?
Yes, Ohio requires all LLCs to file an annual report and pay a fee.
Can an LLC have multiple managers in Ohio?
Yes, an LLC can have one or more managers to handle the day-to-day operations.
Can an LLC be classified as a non-profit in Ohio?
No, LLCs are taxed as government-recognized businesses and cannot be classified as non-profits.
Can an LLC change its legal name in Ohio?
Yes, a legal name change is possible by filing select paperwork and renewing the business’s registration with the Ohio Secretary of State.
Can a single-member LLC in Ohio have more than one owner?
No, a single-member LLC is, by definition, an LLC owned by only one person.
What is the process for merging two LLCs in Ohio?
There are specific steps to take to merge LLCs; contact a legal adviser to assist in the legal process specific to Ohio law.
Will I need to notify Ohio of my LLC’s business purpose?
Yes, as part of filing your paperwork, you must explain what type of activities a LLC is establishing in Ohio.
Can employees own a single-member LLC in Ohio?
No, only one person owns single-member LLCs; others hold executive or employee positions.
Are there any residency requirements for forming an Ohio LLC?
No, there are no residency requirements to form an LLC in Ohio.
Can I form an LLC online in Ohio?
Yes, you can file your LLC paperwork and submit electronically on Ohio Secretary of State’s website.
Is it possible to convert an LLC to a corporation in Ohio?
Yes, it is possible to convert an LLC to a corporation by conducting a formal menu change or dissolution.
Is an LLC the right business structure for a small business in Ohio?
It depends on your business goals. Consider consulting legal and financial professionals to evaluate which business structure is optimal for your small business in Ohio.
Can Ohio-based LLCs conduct business in other US states with a registered agent?
Yes, once registering as a foreign entity with the US state in which the business will operate, an Ohio LLC with an authorized registered agent can conduct business appropriately.

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Conclusion

Starting a single-member LLC in Ohio can be a rewarding experience that offers numerous benefits for entrepreneurs. By following this guide and staying informed about state regulations, you can successfully navigate the formation process and set your new business up for success. Feel free to seek professional assistance from a lawyer or accountant if you have questions or need help. Your journey as a business owner has just begun – embrace the challenges and enjoy the rewards of your hard work and determination.

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