Being a business owner requires you to make the right decisions. This responsibility begins once you decide to start a business. Among the first things you need to decide on are the business entity structure and location.
Choosing A State To Start Your LLC
You may have heard of the limited liability company (LLC) structure. Most emerging entrepreneurs choose this because of the protection and flexibility that it offers. Not only are your personal assets protected, but you can also choose pass-through taxation.
However, the process and requirements of forming a business may vary from state to state. That is why it is also important to choose the right state where you will register your company. Many people automatically think of the state where they live. That may be a good idea if it is where your business is physically located and you plan on conducting most of your operations there. However, that is not the only option available to you. You can do it in another state as long as you follow their laws.
Doing Business In Ohio
If you are thinking of forming a business, consider Ohio. This state is a good place for startups. Having an Ohio LLC comes with a lot of benefits. Among them are tax benefits, such as the following:
- One level of taxation – Unlike corporations, LLCs can avoid double taxation.
- Distribution of profits and allocation of losses – Choosing this business entity structure gives you the freedom to choose the manner of distributing profits and allocating losses regardless of capital contributions.
- Passing through losses to the individual tax returns of the members
- Flexibility in taxation type – You can elect to be taxed as a corporation if you want.
Other Benefits You May Qualify For
There are hundreds of thousands of businesses registered in the state of Ohio. The business climate in the state is friendly. The workforce is skilled and dedicated. The transportation infrastructure is strong. Additionally, there are various business incentives.
Here are some of the other benefits your company can enjoy if you choose Ohio:
- Loan Programs – If you decide to start a business in Ohio, you can have access to different financial assistance programs. Among these are loan programs, such as the following:
- Business and Industry Guaranteed Loans
- 166 Direct Loan
- Certified Development Company, a 504 loan program
- Basic 7(a) Loan Guarantee
- Rural Business Development and Opportunity Grants
- Community Connect Grants
- Community Development Program
- Business Incentives – The state also offers various business incentive programs for startups, small businesses, and medium enterprises. Here are some of them:
- Enterprise Zone Program – Municipal and county governments administer this program. You can register your new company in an enterprise zone. Doing this will help you leverage real and personal property tax exemptions. There are also tax benefits available for non-retail projects. Generally, there are two types of enterprise zones in Ohio. These are distress based, also known as full authority zones, and non-distress based, which are also called limited authority zones.
- New Markets Tax Credit Program – Ohio gives tax incentives for businesses located in low-income communities. Startups may also receive below-market or nontraditional loans for certain projects. Check with the state to see if your company qualifies for any program.
How To Start A Business In Ohio
Now that you know some of the benefits of forming your business in Ohio, your next step is to complete the registration process.
Step 1: Choose a distinguishable name.
Your business entity needs to have a distinguishable name. That’s why you need to conduct a name search to make sure that no other company is already using it. You should also follow the naming guidelines that the state has set.
- It has to have the phrase Limited Liability Company or an abbreviation of it.
- If your company name contains the words attorney, bank, and university, then you will need to file additional papers. You also need a licensed individual in your business.
- You cannot use words that may confuse your company for a government agency.
If you want to reserve your company name while you are preparing the documents to avoid other entities from getting it, then you will have to submit a name reservation form for a fee. Doing this will protect your name for 180 days.
Step 2: Appoint a registered agent.
The state requires all companies to elect a registered agent. You can choose an individual or a third-party organization like DoMyLLC. Your registered agent has to have a physical address that is open during normal business hours. They should also agree to the appointment.
Step 3: File the appropriate form.
Your company has to file a formation document with the Secretary of State. This is known as the Articles of Organization for Domestic Limited Liability Company form. It comes with a $99 filing fee.
Step 4: Get an Employer Identification Number (EIN).
You can obtain an EIN from the Internal Revenue Services (IRS). You may need it for federal and state taxes. It may also be necessary for opening a business bank account.
Step 5: Comply with other tax and regulatory requirements.
Depending on the activities that your company plans on doing, there may be additional tax and regulatory requirements. You may also need to abide by the Commercial Activity Tax of the state. You might have to acquire other business licenses and permits as well.
Step 6: Prepare the operating agreement of your company.
The state does not require you to file a copy of your operating agreement. However, it is advisable to have one. It helps establish the rights, powers, and responsibilities of your company. This document can also prevent any future misunderstandings and disputes among the owners, also known as members.
Doing business as an LLC in the state of Ohio allows you to enjoy various benefits. However, you will have to go through a registration process and submit formal paperwork. If you find the whole ordeal a bit overwhelming, you can hire a third-party organization like DoMyLLC to provide you with assistance.
Business Filing Section