You’ve arrived here because you want a little help in forming a limited liability company. If you search for a comprehensive guide with all the necessary information, you’ve come to the correct location. We’ll show you how to set up your LLC in this post. We’ll walk you through all of the steps involved in creating an LLC. The LLC is the most dependable business structure. It is particularly recommended for those who are just getting their business off the ground.
The acronym LLC stands for Limited Liability Company. It is one of the most common business models in the United States. It can take a long time to start a company. You must follow those procedures, submit documents, and so on. The first step in creating a company is deciding on a business structure. You’ve selected LLC in this case. It’s a fantastic choice. The members’ liability insurance is the most notable advantage it provides. There are also tax advantages. So, though learning about the paperwork and applications can seem a time-consuming process, you will find all of this information in one location.
Let’s take a quick look at the benefits of forming a limited liability company (LLC):
- There is no limit to the number of owners in this company arrangement, making it ideal for start-ups, medium-sized businesses, and small businesses.
- It’s simple to set up, and it keeps the legitimate business company separate from personal properties.
- Tax returns are readily available.
- The proprietors’ privacy is well-protected.
Now, let us take a look at all the steps required in brief:
Step 1: Select a name for your LLC
The first move is to name your LLC before proceeding with any legal or official procedures. What would you fill out the forms with? Right! The name you choose for your company should be exclusive, unforgettable, and convey your business concept. The name of your company is the first thing that will capture the attention of existing customers while also attracting new ones. Keep in mind that the company’s name must not be identical to that of any other company. If the name you want isn’t unique or has already been taken by another company, try to come up with something new. Simply altering the punctuation or inserting capital letters will not suffice; you must also change the keywords. Offensive or insulting language should also be avoided. The name should adhere to the law’s guidelines. If you’re unsure, you can use the business entity name search to see if the name is available. On Ohio’s Secretary of the website, you may conduct this search. The word Limited Liability Company or its abbreviations must appear. Also, in any case, your name should not indicate that it is affiliated with the government.
After you have selected the name for your business, you can also reserve it if you want. If it takes some time to start your business and don’t want any other person to come up with the same name and register it before you, you can lock it for 180 days. You can submit the request online, or you can send the hard copy. You can go to the official website and submit the name reservation form online. For the hard-copy submission, you have to download the form, take a print out and send it to the following address:
Office of the Ohio Secretary of State
P.O. Box 13697
Austin, Ohio 78711-3697
You will have to pay 39 dollars, and it will take around 3 to 7 working days for your application to get processed. If you want, you can also accelerate the process. You have to pay:
- $300 for a four-hour service
- $200 for one-day service
- $100 for two-day service
If you opt for a two-day service process, then you have to apply to
P.O. Box 1390, Columbus, OH 43216.
There is also another option where you can personally deliver the form. You have to submit it to Client Service Center, Suite 103 at 80 E. Broad St., Columbus, OH 43215.
Let us move on to the next important step.
Step 2: Select a Statutory Agent
A registered agent, or in Ohio, known as a Statutory agent, is mandatory to be present in an LLC. Working without one is a punishable offense. A Statutory agent can be a person or an entity whose work is to collect the formal correspondence, legal document on behalf of the LLC. The agent must be present in the company during business hours. That is why the state makes it compulsory to have an agent so that there is someone to respond to the critical and legal documents.
The individual can be anyone, be it your friend, family, acquaintances, etc. The only requirement is that they should be the resident of the state and must be 18 years or over. You can also be your statutory agent. However, certain disadvantages are that you cannot leave the office during working hours because the statutory agent must handle all emails and correspondence. The second point is that the information of the Statutory agent is available, so if you don’t want your personal information to be made public, you can avoid being your agent. You can also designate a company/business as the statutory agent; they must have a street address in Ohio. You may also employ the statutory agent service provider.
The agent serves as a liaison between the LLC and the state. The state requires a reliable individual or location to submit the notices and assurance that they will be sent to the proper authority. As a result, the state needs it. So, don’t even consider working in the absence of an agent because it is illegal and can result in unfavorable working conditions for you or the dissolution of your company.
Step 3: Submit the Articles of the organization
The filing of Articles of Organization establishes the company as a legal entity. You will be able to start your business after completing this stage legally. The Articles of Organization must be filed with the state. It’s the only piece of paper that gives your LLC legitimacy; you can’t form an LLC without it. The filing of the Articles of Organization marks the beginning of your company. Your journey begins from here. The following are some information from the organization’s article:
- The company’s name and address
- The LLC’s designated registered agent’s name and address
- The members’ names and signatures
- The company’s purpose
- Management structure: member-managed or manager-managed
- The date of formation
You must apply the form to the Secretary of State after filling it out. You can submit the form in three ways: Online, mail, hand-delivery. Be careful in submitting the articles and ensure that it contains all the essential documents. Since it is what makes your company legal, all the paperwork must be proper.
Submission via Online method
For the online submission, you have to visit the Ohio Business Central online portal. Log in with your credentials if you have an account. And if you don’t have it, create one. After that, please fill the form and submit it. It is effortless and quick.
Submission via Postal Mail
If you to mail the hard copy, you have to download the form, print it, and send the completed form to the following address:
Office of the Ohio Secretary of State
P.O. Box 670
Columbus, OH 43216
Submission via Hand-delivery
For the hand-delivery method, you have to download the application and deliver the form to the same address mentioned above.
It might take 3 to 7 working days for your application to get processed for all the above methods. If you want, you can accelerate the process. For payment of:
- $100 you can speed up the process to two day
- $200 you can speed up the process to one-day
- $300 you can speed up the process to four-hour
Remember that you have to submit it personally if you are using the one-day or four-hour option. And you have to submit the form to the below-mentioned address:
Client Service Center, Suite 103
80 E. Broad St.C
Columbus, OH 43215
If you are using the two-day service option, then you can mail the application to the following address:
Office of the Ohio Secretary of State
P.O. Box 1390
Columbus, OH 43216
Step 4: Draft an operating agreement
After registering your business, it’s time to lay out the groundwork for your company’s operations. The operating agreement of any company is a contract that lays out all of the laws that all members must follow. This document is not needed to be filed with the Secretary of State. However, having one is a brilliant idea. The operating agreement guarantees the company’s smooth operation. As a result of the deal, all members will have specific obligations, making it easier to run a company. Adopting the operating agreement has several advantages. It will assist you in adequately organizing the organization during times of internal turmoil. However, if you don’t have this arrangement, your LLC will be run under the LLC state rule. These state laws are typical and may not be in your favor because they are not unique to a specific organization. The operating agreement is a mutually negotiated arrangement between the participants, and it can be used as proof that one of them breaks the rules. As a result, strive to include all of the essential points in your agreement.
Now that you understand the importance of an operating agreement, you can create one in one of two ways. Assume you’re in charge of drafting the company’s operating agreement. Keep in mind that all of the information should be included. If you’re concerned that it would require the assistance of a specialist, you’re mistaken. There are many online models available to assist you nowadays. You can build an effective and fantastic operating agreement for your LLC with the aid of these models. You can even hire a lawyer to do it for you. The attorney or counsel can ensure that no information is overlooked and that you receive a perfect operating agreement.
Step 5: Obtain EIN for your LLC
This number is available for free from the Internal Revenue Service. The Internal Revenue Service must issue an EIN (Employer Identification Number) to all newly formed LLCs, as tax filing is a vital step that can never be ignored. An EIN is a nine-digit number that is equivalent to a social security number for a company. You will need one for a variety of reasons. Furthermore, EIN is used for commercial purposes. If you don’t have an identification number, you’ll have to use your Social Security number anywhere for business purposes, resulting in a data breach. As a result, for business purposes, do use the Employer Identification Number. It’s a method for the Internal Revenue Service to keep track of its expenditures and documents. LLCs are excluded from filing corporate income tax returns in most cases. In their tax returns, however, the owners must declare their actual income and expenditures. However, this does not mean that the LLC is exempt from paying federal taxes in situations where it hires employees, is listed as a corporation, or sells products. EINs are also required to open a bank account, recruit staff, and apply for business loans, among other things. An Employer identification number can be obtained by three methods: online, by fax, or by mail.
Using the internet is the most convenient way. You can apply online Monday through Friday between 7 am and 10 pm, and you’ll get your number right away. So, if you need anything done quickly, go for the online form.
Your application can also be faxed. To do so, you must first download the Form SS-4. After that, complete, sign the form, and send the fax to the office at (855) 641-6935. Your application may take a few days to be approved.
Get Form SS-4, fill it out, and mail it to the IRS as part of this procedure. In comparison to the other two methods, this step takes a long time. Mail it to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Step 6: Federal, State, and Local taxes
Taxes are something you can never avoid, and you should file them regularly. As the owner of an LLC, you must file taxes on three levels: federal, state, and local. Furthermore, you might be subject to additional taxes. It is illegal to avoid paying taxes. So gather all of the details and stick to a schedule.
Federal income tax
Since the LLC does not pay the federal government directly, it is classified as a pass-through entity. Profits and losses are listed on the owners’ tax returns. Because of the tax system’s flexibility, the LLC may choose to be taxed as a C corporation or an S corporation. If they want to be a C Corporation, they must pay a separate corporate income tax return.
The tax imposed by State and local governments
The same is true for state taxes; rather than filing a separate corporate income tax return, the owners record their income and losses on their tax returns. It’s always a good idea to search the state’s website for the most up-to-date information. Also, depending on the area, some local councils and counties have their taxes/charges. So make contact with the local government as well. If your gross income crosses $150000 or more, you have to pay a commercial activity tax. Visit the Ohio business gateway, and you can register for the commercial activity tax. Or you can also enroll by submitting a form.
All additional fees and taxes
There is an extra tax that is based on the type of company you have. Some businesses might have to pay an additional fee. There are also taxes to consider if you have workers. The withholding tax must be charged. Similarly, if your business deals in selling goods, you must file a sales/use tax return. As a result, different genres have different tax provisions. You will look up the various forms of taxes on other sectors on the government’s website.
If you have any confusion or questions regarding taxation, you can go to the Ohio department of taxation.
Step 7: Business license and permits
The business license and permits are essential to run any business; they are a legal requirement. Different companies have different license requirements. For example, a bar will need a liquor license; a restaurant will require a health permit, food and service license, etc. it depends on your industry type. So, be diligent in getting the appropriate license as operating without one is illegal. Don’t forget to check up with the local government as some counties, cities, or municipalities have their license requirements. So, it is better to get all the information before moving forward.
Step 8: File the annual report
Most of the State has this step where they have to submit the annual report with the Secretary of the State. It is not the case in Ohio. But if there are some significant changes in your LLC, like you change your company’s address or statutory agent or anything like that, you have to inform the state.
After all these steps, your LLC is ready to start, but before jumping off the wagon, there are few things that you should keep in mind. Formation of the LLC is just the first step; there are more to follow. So check out the following points detailing what to do after creating LLC and how to manage it smoothly.
After the formation
- Split your personal and professional assets. Private properties, such as vehicles, houses, and other valuables, can be at risk if your LLC is sued if you combine business and personal things. You should open a bank account exclusively for business purposes to keep them apart. Your company assets would not be mixed in with your assets in this situation. Your personal property would not be affected even though your business is in financial distress, has debts, or has been issued by another.
- Create a website for your company. It is an essential step toward branding and marketing, which are vital components of any company’s growth. It makes no difference whether a company is big, medium, or small. Anyone should own a website because it attracts consumers and provides valuable information. Don’t forget to build a website once your LLC is up and running. You can get help from a variety of free online services. Making a website is not as complicated as it once was. You will learn everything you need to know about building a website with just a few clicks. As a consequence, it isn’t a significant issue.
- Make a business card for your organization. It would be best if you always were prepared to pitch your company as a business owner. It’s a marketing tactic that works. If you see a potential client, you might hand them your business card. The contact information, as well as the website and business address, will all be included.
- For your company, hire a chartered accountant. It’s not easy to handle your finances when you’re running a company. There are finances to consider and filing taxes, which may feel overwhelming, increasing the likelihood of making a mistake. As a result, it is suggested that you seek professional assistance. The chartered accountant will assist you, provide guidance, and ensure no room for error. You are free to consult your accountant at any time.
- Get insurance for your business at all times. Insurance acts as a backbone for the business in the event of a disaster. You’ll be able to function stress-free knowing that your company is protected.
Now, we can say we have reached the end of the article. We hope that this article will help you in achieving your dream of starting your business. All the best.