Start a Business in Ohio

Entrepreneur’s guide to forming a business in Ohio

If you are planning to register a business in Ohio, then it is a good decision and at the same time, it is also important to understand what the state offers to new businesses. The state boasts of an evolving startup ecosystem where the key focus areas vary from making highways safer to manufacturing radio frequency generators and sustainable microbe inoculant systems. The state has been divided into various regions, with each region playing a key role in contributing to the overall economy of the state, the Northeast Ohio Region is home to the logistics sector and advanced manufacturing industry.

Why companies prefer to register business in Ohio?

Ohio has often been considered as a perfect choice for entrepreneurs when it comes to moving their business from another state or simply forming a new company. The economy of the state plays a key role and is one of the key points attracting sole proprietors to start a business in Ohio. The Real Gross Domestic Product (GDP) of the Buckeye State is $638.91 billion with a variety of industries making valuable contributions to this growing economy. So, when you incorporate in Ohio, there are numerous benefits that you will be able to enjoy. Some of the top benefits are:

• Economic development incentives – One factor motivating entrepreneurs to register Ohio businesses online is the variety of small business incentive programs that they can participate in. Some of the most popular programs include the Job Creation Tax Credit (JCTC), International Market Access Grant for Exporters (IMAGE), Ohio Opportunity Zones Tax Credit program, Ohio Enterprise Zone Program, and Jobs Ohio Revitalization Program.
• Availability of top talent – The first requirement of business operations is always employees. A talented and committed workforce plays a crucial role in overall business development and growth. If you register a business in Ohio, you will be able to leverage the top talent pool available in this state. The state is home to several top universities, including Ohio State University and Case Western Reserve University.

Thinking of how to start a new business in Ohio?

Steps to start a business in Ohio

It is never easy to start a business in Ohio as there are several aspects to be factored in. Depending on the type of entity structure, the requirements, processes, and other aspects may vary. There are certain elements that remain the same for all types of business and are termed general requirements. The Ohio Secretary of State provides a comprehensive list of such requirements. So, let’s take a look at some of the facets of starting a company in Ohio.

1. Prepare a Business Plan for Your Ohio-Based Business

Just like you need GPS directions for traveling; similarly, each business requires some form of a road map for identifying the path it needs to take in order to reach from point A (startup stage) to point B (profit or growth stage). This type of road map is also known as a business plan or a blueprint for small businesses. The plan would take into consideration factors that may affect the business performance and operations from a short and long-term perspective like marketing, employees, finances, competition etc. This type of strategic plan is a must on your Ohio business checklist and should constitute the following:

• Executive summary
• Business Overview
• Organization, ownership, & management
• Industry analysis
• Market analysis
• Products and services
• Competition analysis
• Marketing and sales
• Logistics and operations
• Financial projection

2. Attend Entrepreneurial Training or Development Programs in Ohio

As an entrepreneur, there are several areas to focus on before you register a business in Ohio. One such key area is searching for entrepreneurial training and development programs in the state and attending them. These programs cater to first-time business owners in diverse industries and the objective is to get necessary training in different areas of operating a company like business planning, sales and marketing, financial management, as well as leadership. Some of the top programs in Ohio will help you to handle business operations effectively and turn your focus in the following areas:

• Development of managerial, financial, technical, and marketing skills
• Supportive roles like registration of a business and procurement of funds
• Entrepreneurial behavior and values
• Guidance and mentorship by industry experts
• Create an understanding of modernization, diversification, and expansion
• How to best channel available latent resources for enterprise building

3. Choose a Business Structure for Ohio Business

One of the most important points to include in any Ohio business checklist is choosing the right structure for your new enterprise. The entity structure plays an important role as it controls several aspects like how a business will operate, the type of management and hierarchy, and will also define legal and tax considerations to be made. Each entity structure has different processes, documentation, and fees, especially if you want to register a business in Ohio. These structures also have their own set of advantages and disadvantages. The following structures can be opted for in this state:

• Sole Proprietorship
• Domestic and foreign LLC
• Domestic and foreign corporations
• Nonprofit Corporation
• General partnership
• Limited partnership
• Limited Partnership Associations
• Business Trusts
• Domestic and foreign Limited liability partnership (LLP)
• Professional Corporation
• Benefit Corporation

4. Naming Your Ohio Business

One of the important requirements that will help you to start a small business in Ohio is the reservation of an appropriate business name. Appropriate company name refers to a name that follows all state laws and is available, especially if you conduct an entity name search. The company name has to be reserved or registered with the state and is used to register a business in Ohio and also while applying for EIN, business licenses, permits, loans, and filing of taxes. The business name is also at the heart of any marketing or branding strategy. When choosing the right name, you will need to consider the following:

• Depending on the type of entity structure, you need to ensure compliance with the state naming guidelines.

  For example: – If you are planning to incorporate in Ohio then naming your company and the reservation process will be governed by 2022 Ohio Revised Code Title 17, Corporations-Partnerships, Chapter 1701 – General Corporation Law, Section 1701.05 – Corporate Name.

• The company name should be distinguishable in the records of the office of the Secretary of state.

  For example: – A corporate name should not be similar to the name of any other domestic or foreign corporation, Limited Liability Company, or limited liability partnership among others.

• Once you have chosen a name, it is mandatory to conduct a Business Identity Search, also known as name availability search.
• If your chosen name is available, then you need to apply for a reservation of the said business name by filing Form-534B for Name Reservation / Transfer / Cancellation, along with a fee of $39.

5. Choose Your Location for Ohio Business

If you want to start a business in Ohio then one of the most important areas of consideration is the location of your company. Yes, location matters! Whether you want to establish a brick-and-mortar retail store offer specialized services online or make inroads into newer markets, the vetting and selection of a proper business location is often fraught with several challenges. Of course, there are certain factors that will play a key role in deciding the right location. They are:

• Nature of your business – The primary business activity often plays a key role in choosing a location.

  For example: – you register an Ohio business online and its primary activity is export and import. The best location would be a foreign-trade zone (FTZ) within the state. The top FTZ is Columbus, Ohio (FTZ 138) as it is considered to be a high-speed international logistics hub. You will also be able to participate in the FTZ program which offers several benefits.

• Proximity to the end market – Whether you are planning to promote a specialized service or sell goods or other manufactured products, it always pays to be located closer to the market.

  For example, if you offer professional services or operate in the technology sector, Cincinnati, OH, would be an ideal location. Cincinnati is home to a cost-competitive innovation corridor that provides resources and support to a variety of tech companies and startups.

• Zoning Ordinances – It is a known fact that location plays a critical role in determining the financial success of any company. Hence, it is important to choose a ‘business-friendly’ location, and such a location has pro-business zoning ordinances. If you register a business in Ohio, especially in Hamilton, OH then you need to check their zoning map as it highlights areas where you can operate your company. They also provide a ‘Zoning Land Use Chart‘ that defines different types of businesses under categories like permitted use of specific land or area, conditional use, accessory use, and specific approval required.

• Cincinnati
• Columbus
• Hamilton
• Akron
• Springfield
• Dayton
• Canton
• Youngstown

6. Register Your Ohio Business

If you want to start a business in Ohio or register a foreign company, then you will be required to undergo certain processes in compliance with the 2022 Ohio Revised Code, Title 17 – Corporations-Partnerships. The type of registration documents to be filed will be determined by the type of entity structure. The new business incorporation or registration documents have to be filed with the office of the Ohio Secretary of State. Let’s look at an example to understand this.

Example: If you want to form a C Corporation, then you will have to submit the Articles of Incorporation pursuant to OH Rev Code § 1701.04 (2022). The processing fee for the incorporation documents will be $99. Similarly, if you want to register a business in Ohio as a limited liability company, then you will be required to file Articles of Organization along with a filing fee of $99 pursuant to OH Rev Code § 1706.16 (2022).

Do you want to start a new company in Ohio?

7. Get Your EIN

Whether you start a small business in Ohio or a large corporation, one of the important annual requirements in this state is that of business taxes. Some taxes have to be filed with the state while some businesses or owners may be required to file with the Federal government. This is where having an Employer Identification Number (EIN) can be advantageous. The EIN is a unique ID that is assigned by the Internal Revenue Service (IRS) to businesses and it allows the IRS to identify entities for the purpose of tax reporting. The employer identification number is also required when applying for a loan or towards opening a business banking account.

8. Open a Business Bank Account for Ohio

Once you register a business in Ohio, it is important not to lose sight of the budgetary expenses and overall finances associated with running your company. Now, your personal savings account may sound good enough, but it is not and can make tax preparation extremely challenging. Hence, maintaining a separate business bank account is not only good from a tax perspective but also beneficial for the entity. Such a banking account will not only make your business look professional but also help reduce the vulnerability of your personal assets, thus providing liability protection.

9. Obtain Business License and Permits

Once you register a business in Ohio, there will be several important state requirements that need to be fulfilled in order to operate your business smoothly. One such requirement is that of business licenses and permits. It is important to note that the licensing regulations and requirements vary from one state to another, but more often than not, the type of license depends on the primary business activity. Permits and licenses are an important aspect of your Ohio business checklist and are categorized as under:

• General Business license – Some states have a requirement for a general business license, but one of the biggest benefits you will have if you start a small business in Ohio is that there is no need for any general business license. When you register your company with the SOS, the process itself is considered to be an application for a general business license.
• Professional and Occupational License – If you start a business in Ohio that revolves around a specific occupation or professional like architecture or Certified Public Accountant (CPA) then you will need to apply for a professional or occupational license. Such licenses are issued by different government or state agencies and the application process and fee would vary according to the license.
• Vendor’s License – Another type of licensing prevalent in the state of Ohio is that of a vendor’s license. If you incorporate in Ohio and your company is involved in retail sales of any tangible personal property or even taxable services, then you will be required to apply for a vendor’s license. You may require this license even for internet or online sales from a fixed or transient location. The Ohio Department of Taxation is responsible for the issuance of this license.
• Local Zoning and Building Permits – When you start a business in Ohio in any city or county, you need to check the local zoning laws. This is more so because the zoning laws are different for each county, and you may even be required to apply for local permits and licenses based on the location of your company.

10. Register for Taxes

Once you register a business in Ohio, depending on the primary business activity, you may be required to register for annual taxes in the state. There are different types of taxes applicable for new and existing businesses, but if you have a sales tax nexus in this state, then you will need to register for sales taxes, also known as a Sales Tax Permit. You can apply for it using the Ohio Business Gateway Portal and will be required to provide business activity information including a brief description of your service or products along with an estimated monthly or annual sales volume.

11. Obtain Business Insurance

Different types of businesses have different requirements, especially when it comes to registration and licensing. One of the important areas that new companies fail to focus on or address is business insurance. Insurance actually helps small businesses to cover costs especially those associated with property damage and liability claims. If you register for Ohio business online, then the most common forms of business insurance that you can choose from are:

• Business Owner’s Policy (BOP)
• General liability insurance
• Professional liability insurance
• Product liability insurance
• Business interruption insurance
• Employment practices liability insurance
• Workers’ compensation insurance
• Home-based business insurance

12. Annual and Ongoing Requirements

Once you register a business in Ohio, you will need to ensure complete compliance with state annual requirements. Different states in the USA have different annual requirements, and fulfilling them will ensure good standing in the state. When you establish a new entity in the state, one of the requirements is that of an annual report. Ohio requires certain entities to file a biennial report, although corporations and LLCs are not required to file the same.

Some Important Quick Resources for an Ohio Business

Each business being formed in the state of Ohio has its own set of requirements and challenges. As a first-time business owner or an entrepreneur, you may need all possible resources and information pertaining to the formation and operations of your company. The following state or private agencies will provide you with information and help address any queries you may have.

Ohio Secretary of State

The office of the Ohio Secretary of State is one of the most important websites as you will find all types of information and resources pertaining to starting a new business, operating a business, licensing, taxes, business record searches, business name reservation, forms and fees, and service of process among others. They also have a dedicated section for small business resources.

• Ohio Secretary of State
  Client Service Center
  180 Civic Center Dr.
  Columbus, Ohio 43215
  Phone – (614) 466-2655
  Email: MAmato@OhioSoS.gov
  Website – https://www.ohiosos.gov/

Ohio Department of Taxation

The Ohio Department of Taxation is the administrative section of the Ohio state government. This department is primarily responsible for administering and collecting state taxes and various local taxes. On its website, you will find valuable resources regarding any type of business tax.

• Ohio Department of Taxation
  30 E Broad St #22,
  Columbus, OH 43215
  Phone – 1 800-282-1780
  Website – https://tax.ohio.gov/

Ohio Treasurer’s Office

If you are searching for information and resources regarding investors and financial institutions in the state, the Ohio Treasurer’s Office will be a useful place to start. They also provide a detailed list of forms and documents related to Investment Policies, Collateral Policies, Trustee Agreements, Merchant Services Setup, and the ACH Financial Transaction Device, among other topics.

• Ohio Treasurer’s Office
  30 E. Broad Street – 9th Floor
  Columbus, Ohio 43215
  Phone – (614) 466-2160
  Email – CDprograms@tos.ohio.gov
  Website – https://tos.ohio.gov/

Ohio Chamber of Commerce

When you start a business in Ohio, a visit to the website of the Ohio Chambers of Commerce is recommended as it provides a wealth of resources for businesses and entrepreneurs. You can find information pertaining to discounts, marketing, and relationships that businesses can leverage to grow their company. If you join a chamber of commerce, then it can help boost overall sales while significantly improving the visibility and credibility of an entity.

• Ohio Chamber of Commerce
  34 S. Third St.,
  Suite 100
  Columbus, OH 43215
  Phone – (614) 228-4201
  Website – https://ohiochamber.com/

Ohio Small Business Development Center

One of the agencies providing valuable resources on new business development is Ohio Small Business Development Centers (SBDC). You will have access to tools, resources, business experts and consultants, and information on small business funding options.

• Ohio Small Business Development Center
  320 N Grant Ave #1062,
  Columbus, OH 43215
  Phone – (614) 287-5294
  Website – https://clients.ohiosbdc.ohio.gov/

Ready to Start a Business in Ohio?

Ohio is one of the favored states thanks to the low cost of doing business and is home to the third largest manufacturing workforce in the nation. Once you register a business in Ohio, you will also be able to leverage different state programs, including financial incentives and grants.