Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Ohio, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting an Ohio LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
What’s the least amount I have to pay to form an LLC in Ohio?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Ohio LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
OH LLC Start-up costs
There are two primary start-up costs in Ohio. The most important one is the Articles of Organization. The fee is $99. But regardless of whether that sounds like pocket change or an expense you’ll have to budget for, it’s an expense you can’t avoid. After all, the Articles is what officially forms your business in the state. Without it, you’re not a recognized business.
A lot of Ohio LLCs will also need to get licenses in order to run a compliant business. In a way, the Articles of Organization acts as your “general business license” from the state. It won’t cost anything extra, and you won’t have to worry about renewing it. But there are others to consider. More specifically, you’ll need to check if you need any industry-specific licenses. For example, Ohio requires licenses for athletic trainers, wildlife rehabilitators, and more.
It’s up to you to research whether or not you need one of these licenses, though. Luckily, Ohio’s Licenses & Permits page is the perfect place to start. Since the search duties are up to you, we can’t provide a comprehensive list of price tags for these licenses, but you can reasonably expect to pay an application fee when you get one.
Ongoing costs for an LLC in OH
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license, but you might have to renew your professional or occupational permits. Each Ohio licensing board has its own policies for renewals, though, so we can’t really list them here. This guide would be tedious if we did. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Ohio (or any state, for that matter), one of the biggest annual costs you’ll have will be taxes. That said, Ohio has slightly unique taxes when it comes to income taxation. If you’re taxed as a pass-through entity, it’s pretty straightforward: you’ll pay a rate between 0% and 4.797% depending on your personal income levels. LLCs taxed as corporations will pay the state’s Commercial Activity Tax instead. If you have more than $150,000 in gross receipts, you’ll be subject to the tax. This is a tax that requires registration, though.
If you’re involved in retail sales, you’ll need to collect and pay the state sales tax. The rate is 5.75%, but the state allows cities and counties to add local surcharges if they so choose. There’s also a wide variety of miscellaneous business taxes that might apply to your LLC: petroleum, horse racing, and financial institutions are just a few examples. If you think a miscellaneous tax might apply to you, we recommend checking out the Ohio Department of Taxation.
What are the discretionary costs to form an Ohio LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Ohio doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Business Name Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing a Name Reservation/Transfer/Cancellation. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. Ohio requires a $39 fee for this application, but it protects your name for 180 days, buying the time you need to set everything else up without losing your name.
2. Obtaining a Trade Name or Fictitious Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. A trade name or fictitious name, sometimes called assumed names or DBAs, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A Trade Name acts kind of like a nickname for your business; some LLCs and corporations also use Trade Names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a Trade Name, if it differs from your legal name, you need to register it before you can use it.
Quick note: Ohio makes distinctions between Trade Names and Fictitious Names. On one hand, they both do the same thing—they act as a legal nickname for your business. A Fictitious Name registration simply alerts the state to the fact that you’re using the name in the state. In contrast, the Trade Name tells the state that you’re using the name, but it also protects the name for your exclusive use.
No matter which one you choose for yourself, you’ll have to ensure that your name isn’t already claimed as a Trade Name or a registered entity like an LLC or a corporation. After that, you can file your Name Registration form. It’s $39 for this registration, and it lasts for 5 years. Before it expires, if you intend to continue using it, you’ll have to renew it for $25.
For more information on this process, check out our guide to trade names and fictitious names in Ohio.
3. LLC formation services
Paperwork is a massive hassle. And unless you’re starting an LLC to help other Ohio residents with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting an Ohio LLC: the Articles of Organization, license applications, trade names—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of packages, with basic options starting at low prices like $39 from Zen Business (one company, Incfile, even offers a starter package for $0). But if you’re willing to shell out some serious cash for comprehensive assistance, you’ll find package prices going as high as $799.
These services are completely optional; you can DIY your Ohio LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
4. OH Registered agent services
Ohio law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Ohio allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Ohio registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In Ohio, how quickly the state processes your Articles of Organization (or any document, really) depends on how you file. If you file online, your turnaround is almost instant. But if you file by mail, you’ll have to wait approximately 7 business days to get your documents approved.
If you plan on filing by mail but 7 days is too long to wait, you can expedite for a $100 fee. That will ensure that your LLC is processed within 3 business days instead. If you’re in a rush, we recommend filing online so you can avoid the hassle of extra fees. But this is ultimately your call. You can let your budget, your preferences, and your timetable be the deciding factors.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Ohio business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting an Ohio LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the $99 Articles of Organization fee is pretty manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Ohio LLC off on the right foot. We wish you and your new business the best!