Ohio Makes It Easier To Form LLCs: What You Need To Know
In 2022, Ohio made important modifications to its business formation laws, making it easier to form entities such as limited liability companies (LLCs), as well as helping to enable more minorities, women, and veterans to own their own businesses. Below, we explain what is entailed in forming an LLC, specifically, as the rules and regulations have changed so as to provide some benefits to going in the LLC direction when you are forming your business:
Business Formation Options: The Pros & Cons of LLCs
There are a number of different business structures that are available when you are forming a business, including the following:
- For-profit corporations
- Limited liability companies
- Limited liability partnerships
- Limited partnerships
- Non-profit corporations
- Professional corporations
- S corporations
- Sole proprietorships
However, an estimated 35 percent of all businesses in the US are formed as LLCs, in part the LLC business formation provides a certain degree of flexibility and protection in terms of its formation and management; specifically, instead of paying federal corporate taxes, individual LLC members report earnings and losses through their own federal tax forms, members generally are not liable for liabilities, debts, etc. of the company (unlike the circumstances surrounding partnerships and sole proprietorships), and LLCs in Ohio are not required to file annual reports. However, LLC owners can be subject to higher self-employment taxes in Ohio due to the state’s commercial activity tax.
Forming An LLC
When forming an LLC, the following decisions and investments must be made very early on in the process:
- Whether those who control the company will technically be “members” (whereby owners exert most of the control over the LLC) or “managers” (where a small group of professionals are responsible for most of the management)
- Who or what will be responsible as the designated statutory or registered agent, which comes with tax and other legal document obligations – this can be an individual, the owner, another business, etc.
- You must file Articles of Organization, which include, at a minimum, the contact information for the agent, the name of the LLC, and its purpose
- (Depending upon the type of business), you may need to file for a business license or permit
- You will need to file for an EIN with the IRS
Columbus Ohio Business Formation Attorneys
While not required under Ohio law, it is always a good idea to retain an experienced Columbus general counsel attorney to help you with any and all documents associated with forming your business, including an LLC operating agreement, which outlines how you will do business, as well as important policies and procedures.
Our attorneys can help. Contact our Columbus business representation attorneys at the Kohl & Cook Law Firm LLC today to find out more.