The idea of starting an Ohio limited liability company (LLC) can be overwhelming on its own. But when you don’t know how much you can expect to pay, it’s easy to feel like you’re in too deep.
That’s where we come in. This article will help you understand the costs of starting an LLC in Ohio.
By the time you finish reading, you’ll know:
- The cost of forming an Ohio LLC
- Additional expenses that are worth the investment
- The benefits and disadvantages of each LLC formation method
In other words, we’ll teach you what you need to know about how much an Ohio LLC costs.
Basic Ohio LLC Formation Costs – Starting at $99
According to the Ohio Secretary of State’s fee schedule, the bare minimum cost to start an Ohio LLC is $99.
It consists of only one item:
- Articles of Organization filing fee: $99
However, many businesses will need to obtain a vendor’s license to operate, which will cost an additional $25. Depending on your industry, you may also need professional licenses or business permits, the costs of which vary.
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Ohio LLCs – the Basic Costs
The cost of starting an LLC in Ohio depends on the industry in which you plan to operate. This is because there are different requirements for different types of businesses. We’ve outlined the potential costs below.
Articles of Organization Filing Fee — $99
Articles of organization are the legal documents that officially create LLCs. If you don’t file articles of organization, you don’t have an LLC. It sounds complicated, but all you need to do is fill out basic details about your business in the Ohio articles of organization form.
While you or the person handling your LLC formation can draft your own Ohio LLC articles of organization, it’s perfectly acceptable to simply fill in the blanks in the state’s form. You can also file online, which is even simpler.
Vendor’s License — $25
While not every business will need to get a vendor’s license, Ohio law says that businesses that sell tangible goods and “taxable services” must charge sales and use taxes. A vendor’s license allows you to collect these taxes from your customers.
You can learn more about sales and use tax laws, including which services are subject to the tax, on the Ohio Department of Taxation’s website.
Professional Licenses and Business Permits — Various
Ohio also requires some businesses to obtain additional licensing or permits to operate legally. Unfortunately, because the costs of these licenses and permits vary, we can’t list a set cost that will apply to all LLCs.
You can check Ohio’s list of statewide licenses and permits to find out if you need to get a license for your business.
Additionally, some cities may require you to obtain business permits. For instance, the city of Cincinnati makes certain types of businesses apply for a license. Make sure you check with the city where you plan to operate your LLC to see if you need to get a business license.
Ohio LLCs – Optional Costs to Consider
In addition to your mandatory starting costs, you may want to set aside a little bit extra to cover some extra expenses. While not mandatory, incurring a few more costs now can pay off in the long run.
Expedited LLC Filing Fees — $100 to $300
The standard processing time for a new Ohio LLC is three to seven business days. If you want to open your doors for business as soon as possible, you may want to pay a little more for expedited service.
The Ohio Secretary of State offers three options:
- 2-day processing: $100
- 1-day processing: $200
- 4-hour processing: $300
To qualify for 1-day or 4-hour service, you must file your articles of organization in person at the Secretary of State’s Client Service Center. And to receive 4-hour processing, you must deliver your documents before 1:00 p.m.
Statutory Agent Fee — about $100 per year
Ohio law requires your LLC to maintain a “statutory agent,” also known as a “registered agent,” in the state.
There’s no additional fee to initially register your statutory agent since you’ll simply include that info in your articles of organization. However, there is a $25 state fee if you ever need to update your statutory agent.
New business owners often think it’s a good idea to name themselves as their LLC’s statutory agent. But what they don’t realize is that to do this, they must always be available to receive documents during normal business hours and publicly list their address online.
That’s why we suggest using a professional registered agent service for your LLC. It only costs about $100 per year, and you’ll never have to worry about missing documents or sorting through junk mail.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
An operating agreement is a contract that sets the rules for your LLC. The requirements can be laid out in detail: from when the members should meet to how and when people can enter or exit the company. The agreement should cover a wide range of contingencies and considerations that may become relevant in the future.
Ohio does not require an LLC to have an operating agreement, but we advise that you get one. Without one, your company will be at the mercy of state default laws when problems arise.
Operating agreements are internal documents. That means you don’t have to file it with the state. You can choose to write your own Ohio LLC operating agreement, but we don’t suggest you do so unless you have professional experience in the area.
One option is to hire an attorney to draft an Ohio LLC operating agreement for your business. If you choose this route, you will have the security of knowing that all potential issues have been addressed by a professional with experience in this area. You could also go with an LLC service that will draft a solid operating agreement for your LLC for as little as $39.
DBA Fee — $39
Even if you like your LLC’s name, there may be a good reason to use a different one. For instance, you might want to drop that pesky “LLC” to make your name less formal. Or you might want to change your name down the road to reflect changes to your business.
If you want to use a name other than your legal LLC name, you need to register a “doing business as” or “DBA” name. Ohio calls DBAs “trade names” or “fictitious names.”
You can register a DBA by submitting a Name Registration to the Ohio Secretary of State and paying a $39 filing fee. You can have this document processed more quickly by paying an expedited service fee, as we discussed earlier.
Name Reservation Fee — $39
If you have the perfect name for your business but can’t officially start it today, Ohio lets you reserve a name for 180 days. This will keep your desired LLC name from being taken by someone else before you’re ready to launch.
To do this, all you have to do is file a Name Reservation and a $39 processing fee with the Ohio Secretary of State. As with the other documents we have mentioned, this filing can be expedited.
Domain Name — about $20 per year
Having an internet presence is vital to running a successful business in today’s economy. And getting a domain name is the first step to establishing that presence. Though domain names have been costly in the past, they are much more affordable nowadays.
Even if you aren’t planning on building a site right now, we suggest that you buy your domain as soon as possible. If not, someone else could take the domain that you want and stop you from using it. For instance, “domain squatters” will monitor newly-registered LLCs and buy their potential domains so they can resell them at a huge markup.
You can get a domain name through GoDaddy.com or a similar platform for about $20 to $50 per year. Plus, these businesses often run sales that allow you to score your domain at a discounted rate.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number that the Internal Revenue Service assigns to businesses. It’s basically a social security number for a company. Some LLCs are legally required to obtain one, while others are not.
Even if the IRS doesn’t say you need an EIN, we suggest that you apply for one. Most banks won’t let you open a business account without one. Plus, having an EIN can help you protect yourself against identity theft.
You can get an EIN free of charge through an online application or by mailing in Form SS-4. The process is quick and easy, so you shouldn’t pay someone else to get an EIN for you unless it’s part of a larger service package.
Foreign LLC Qualification Fees — about $100 per extra state
While the ultimate goal of every business is to grow, keep in mind that if you expand to other states, you’ll have to shell out some more cash. You won’t have to create another LLC, but you will need to register as a foreign limited liability company in each state where you want to do business.
The foreign LLC state fee will depend on the state you are registering in. But to give you an idea, expect to pay about $100 in fees per state.
Writing Formation Costs Off
The expenses associated with creating a new Ohio LLC can usually be deducted from your taxes as business startup costs. The IRS offers a substantial amount of guidance on this issue. We recommend that you review the IRS website to see which of your expenses are tax-deductible.
You should also note that LLCs are typically considered to be “pass-through” entities for tax purposes. Because of this classification, LLC owners can usually deduct up to $5,000 in startup expenses for the year they form their business.
Bob decides to open a small antique shop in Cincinnati, Ohio, through the business entity Bob’s Olde Time Antique Shoppe, LLC. He will be the only LLC member, and he does not plan to hire any employees.
His formation costs are as follows:
- Articles of Organization: $99
- Expedited Fees: $200
- Vendor’s License: $25
- City of Cincinnati Antique Dealer’s License: $45
- Operating Agreement: $60
- Statutory Agent Fees: $99
- Name Reservation Fee: $39
- DBA Fee: $39
- Web Domain Costs: $30
Because LLCs are pass-through entities, the business itself doesn’t have to pay any taxes. Instead, Bob will report his income from the LLC and any business deductions as his personal income for both his state and federal taxes.
The total amount of Bob’s startup costs is $636. Before these expenses were deducted, his total taxable income for the year was $60,000. By deducting these expenses, his taxable income will be reduced to $59,364. This will lower his 2022 federal income taxes from $8,817 to $8,677.
While this may not sound like a lot, LLC owners who consistently deduct their business expenses can see significant tax savings over time.
Cheapest Way to Start an LLC in Ohio
Now that you understand the costs of starting an LLC in Ohio, you are probably wondering what your next steps should be. The best services for you will vary based on your unique circumstances. Still, there are a few basic options you’ll want to consider.
Formation Service – $39 + state fees
One of the most popular choices for people interested in starting a new LLC is an online business formation service.
These are companies that specialize in helping entrepreneurs realize their dreams. They have knowledge of all the relevant state laws about starting an LLC and the required forms and documents.
Using an LLC formation service is a quick and simple way for most entrepreneurs to start an LLC:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services are the preferred choice of many business owners, they are not right for every LLC. Some disadvantages of this option include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
If you hire an attorney, you will get a reliable and knowledgeable professional with expertise in Ohio business formation. Just know that this option can be costly. Many attorneys charge an hourly fee for their services, and their rates are often hundreds of dollars an hour.
Even though it can be expensive, hiring a lawyer comes with benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
However, for the average business owner, the cons of hiring an attorney typically outweigh the advantages.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Armed with the results of their online research, many fledgling business owners choose to form their new LLC on their own. While this is always an option, always remember that your time is valuable. When you spend hours starting an LLC, you can’t spend that time working on your business.
Here are some advantages to keep in mind when considering the DIY approach:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
However, there are also some negative aspects to taking on this task yourself:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Ohio LLC Fees: How Much Will it Cost to Maintain your LLC?
Once you get your new LLC up and running, make sure you account for the annual costs you will incur.
Ohio does not require LLC owners to file an annual report, pay annual fees, or renew their vendor’s licenses. However, you may need to cover the costs of maintaining your professional license or local business permit if you have one.
Some of your optional third-party business expenses will also be due on an annual basis, including:
- Statutory agent fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Ohio
In Ohio, LLCs are not subject to a corporate income tax, but you will need to pay personal income tax on your business profits. Additionally, if your LLC’s gross sales exceed $150,000, you may need to pay a commercial activity tax.
If your LLC has employees, you will need to pay and withhold payroll taxes. And as we discussed earlier, if you sell goods or taxable services, you must collect and pay sales and use tax. These amounts will vary based on your LLC’s income and other details.
For more information, check out the Ohio Department of Taxation website.
Ohio LLC Formation Costs Quick Links
- Ohio Business Filings
- Ohio LLC Fee Schedule
- Ohio Vendor’s License
- Ohio Licenses and Permits
- Ohio Secretary of State
- Ohio Department of Taxation
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Ohio LLC Formation Costs FAQs
How much does it cost to start an LLC in Ohio?
The minimum fee is $99. Depending on the kind of business you are starting and your other needs, it may end up costing you more.
What is the cheapest way to start an LLC in Ohio?
A do-it-yourself approach is the cheapest in terms of cash spent. However, it’s not really a smart choice if you don’t have the time to put into it. The best balance for most people is to use a formation service with an affordable price tag.
Do I need to hire an attorney to form an LLC in Ohio?
No. Not everyone is best served by hiring a lawyer. A formation service or DIY approach will be more than adequate for most business owners.
Can I pay to form an LLC more quickly in Ohio?
Yes. Formation services will generally complete these tasks faster than you could on your own. You can also pay the state to expedite your business filings when they are submitted.