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Starting an LLC in Ohio isn’t just about having a great idea. It’s also about knowing the financial hurdles ahead. Don’t let the thought of costs spook you! We’re diving into Ohio’s nitty-gritty of LLC expenses to help you stay savvy with your budget.
Moreover, we’ll clue you in on tools like Tailor Brands, which offers wallet-friendly LLC services. So, come along as we explore the monetary ins and outs of making your business dreams a reality in the Buckeye State.
What Is the Cost of Forming an LLC in Ohio?
In Ohio, the main expense of establishing an LLC is the $99 fee required for online submission of your LLC’s Articles of Organization via the Ohio Secretary of State’s website.
Ohio Foreign LLC Formation Costs
If you already own an LLC registered in another state and want to expand your business to Ohio, you must register your LLC as a foreign entity in Ohio.
Registering a foreign LLC in Ohio costs $99. You can submit the “Registration of a Foreign Limited Liability Company” form (Form 617) online or by mail.
Annual Cost for LLCs in Ohio
Setting up and managing a Limited Liability Company (LLC) in Ohio involves more than just initial LLC costs. It’s crucial to grasp the ongoing expenses needed to maintain your LLC’s legal standing and compliance. This knowledge helps you plan your budget and keep your LLC financially healthy.
The primary recurring expenses for an Ohio LLC include the Commercial Activity Tax (CAT), an annual tax based on the LLC’s gross receipts, which starts at a minimum of $150, depending on your commercial activity. If your LLC operates under a trade name, there’s a $25 renewal fee every five years.
Ohio requires every LLC to designate a statutory agent who handles legal papers and official communications; the cost for this service can vary based on whether you choose yourself, another person, or a professional registered agent service.
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How Much Does It Cost to Start an LLC in Ohio With the Best LLC Service?
Tailor Brands LLC Formation Cost
Filing an LLC in Ohio initially costs $99, with the price potentially varying based on any added services you choose. Normally, processing takes about 2 to 3 weeks, but you can opt for faster options: either 4 to 6 days for an additional $50, or 1 to 2 days for an extra $100.
Tailor Brands offers several LLC formation plans. Their Lite LLC plan, the most budget-friendly option, covers basic LLC formation and standard processing for just the state filing fee. The Essential LLC plan, at $199 plus state fees, includes expedited processing, annual compliance services, and an operating agreement. This plan requires an annual renewal fee of $199.
The Elite LLC plan is Tailor Brands’ top-tier offering at $249 plus state fees. It bundles everything from the Essential plan with extra business tools like a free business domain for the first year, a DIY website builder, an online store, eight complimentary logos, a digital business card, a business card tool, and a social media post maker. To maintain these services, Tailor Brands charges an annual fee of $249.
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Additional Costs When Starting an LLC in Ohio
Ohio LLC Name Costs
Choosing a name for your Limited Liability Company (LLC) comes at no extra cost. The approval of your selected Ohio LLC name is included when your Articles of Organization are officially accepted by the state.
While some online sources might suggest reserving an LLC name is necessary, it’s generally not required in most states. Reserving a name is optional.
If you choose to, you can reserve your preferred name for up to 180 days before formally establishing your LLC. Just submit a Name Reservation / Transfer / Cancellation form (Form 534B) with a $39 fee to do this.
Ohio Registered Agent Costs
The annual fee for a Registered Agent in Ohio can vary from $0 to $125. Ohio law mandates the appointment of a Registered Agent (also referred to as a Statutory Agent) when you establish your LLC.
This agent, who can be either an individual or a business entity, is tasked with receiving legal documents and state communications for your LLC. They must maintain a physical address in Ohio and be available during standard business hours.
You can avoid fees by serving as your own Registered Agent or by appointing someone you know to act as your LLC’s Statutory Agent.
Alternatively, you may opt for a Registered Agent service, which generally charges between $100 and $300 annually. These services provide additional business support and can help maintain your privacy.
Consider hiring a Registered Agent service if:
- You don’t have an Ohio address (as Ohio law requires a Statutory Agent to have a physical address in the state).
- You prefer to keep your address private (some services allow you to use their address to help maintain your privacy).
Ohio Operating Agreement Costs
There’s no charge ($0) for the LLC Operating Agreement.
This document acts as a formal contract among the members of an Ohio LLC, detailing ownership stakes, management structures, and profit-sharing plans. It’s recommended for both Single-Member and Multi-Member LLCs to draft and keep this agreement, distributing copies to each member. Usually, other platforms would charge between $50 and $200 for a similar Ohio LLC Operating Agreement.
Ohio EIN Cost
There’s no fee for obtaining an LLC EIN Number, it’s completely free.
An EIN, or Employer Identification Number (also referred to as FEIN, Federal Employer Identification Number), is essential for various business activities, including filing taxes, opening a bank account for your LLC, and hiring employees. Although many services charge a fee to acquire an EIN for your LLC, you can secure it at no cost.
You can quickly and easily file for an EIN online through the Internal Revenue Service (IRS) website, and the process typically takes just a few minutes.
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Ohio LLC Taxes
The annual expenses for Ohio LLC owners can differ significantly based on the variety of taxes they’re required to pay. These taxes include:
Federal Income Taxes
The Internal Revenue Service (IRS) provides different tax treatment options for Limited Liability Companies (LLCs). Single-member LLCs are automatically considered Disregarded Entities, meaning the owner must file their federal income tax returns and pay any taxes due.
Taxation varies depending on the owner’s status: if owned by an individual, it’s taxed like a Sole Proprietorship; if owned by a corporation, it’s subject to branch or division taxation.
For multi-member LLCs, the default classification is a partnership. Under this setup, the LLC must file a 1065 Partnership Return and issue a Schedule K-1 to each owner, outlining their share of the profits. Owners then include this income on their personal tax returns using Form 1040.
Husband and Wife LLC Taxes
In some states, a husband and wife who own an LLC together have the option to be taxed as a Single-Member LLC (Qualified Joint Venture) instead of a Multi-Member LLC. This option is available in community property states, but not in states like Ohio.
Electing Corporate Taxation
LLCs can choose corporate taxation instead of their default tax statuses. There are two types of corporate taxation: S-Corporation and C-Corporation.
To be taxed as an S-Corporation, an LLC can file Form 2553, which may offer tax advantages for well-established businesses. On the other hand, filing Form 8832 enables an LLC to elect C-Corporation status, a choice that’s less frequent and generally more advantageous for larger companies.
Ohio State Income Tax
For Ohio LLCs, owners of Single-Member LLCs usually report the LLC’s profits or losses on their personal state tax returns. On the other hand, Multi-Member LLCs often have to file a state-level Partnership return, in addition to the personal state tax returns for each owner.
Pass-through Entity Tax
Ohio provides the Pass-through Entity Tax (PTE) option, which permits LLCs to pay taxes at the entity level. Opting for this can result in savings on the State and Local Taxes (SALT) portion of federal income taxes.
Local Income & Sales Tax
LLCs in Ohio might be subject to local tax responsibilities within their municipalities. It’s advisable to hire an accountant to ensure precise preparation of local income taxes.
Ohio Sales Tax
Ohio-based LLCs engaged in selling products to consumers are often required to collect sales tax and must secure a Seller’s Permit from the Ohio Department of Taxation. This permit allows for the collection of sales tax on retail sales throughout the state.
Ohio LLC Payroll Taxes
If an Ohio LLC employs staff, it’s responsible for submitting payroll taxes, which include federal and state income tax withholdings, Social Security and Medicare taxes, as well as federal and state unemployment taxes, in addition to local and county deductions. Proper payroll setup is essential to dodge penalties and fines, leading many businesses to hire payroll services or consult with accountants for assistance.
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Ohio LLC Cost – FAQs
Conclusion
Setting up an LLC in Ohio involves a complex financial structure that extends beyond just the initial registration costs. Managing this process requires more than paying the filing fee; it involves compiling necessary documentation, using registered agent services, and addressing key issues like operating agreements and securing an EIN.
Effectively handling these financial elements is crucial, and this is where the specialized expertise of LLC services like Tailor Brands becomes invaluable.
Understanding these various costs and leveraging Tailor Brands’s expertise allows aspiring entrepreneurs to launch their Ohio LLC with confidence and preparedness for the journey ahead.
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