How much does it cost to form an Ohio LLC or Corporation?

Ohio LLC or Corporation

The state of Ohio is quite popular when it comes to starting a new business. Apart from the low forming cost for Ohio Corporation, the state offers just the right business climate. The state has project-ready sites for new businesses as well as those wanting to relocate to Ohio. A modern logistics and distribution infrastructure, along with skilled workforce training programs and an extensive array of small business incentive programs, provides Ohio with an edge for businesses looking towards growth and sustainability. You can choose to form an LLC or a corporation, although you will need to consider several factors before registering an entity. The overall annual maintenance cost of Ohio Corporation or LLC, tax consequences, and state laws should be taken into consideration before the incorporation process.

Which business entity should I choose for the Ohio business?

If you have a business idea that you want to transform into a working business model then the first step would be to identify an entity structure. There are several different structures that you can form in Ohio, from a sole proprietorship to a limited liability company. Each type of entity has its own advantages and disadvantages, and you need to identify how beneficial a particular structure is to the operations of your company. You will need to focus on the cost perspective, like the cost to form Ohio LLC or the total cost towards the formation and operations of a specific entity. The two most popular forms of business are corporations and limited-liability companies, and a comparative analysis of LLC vs Corporation in Ohio can be quite useful. Let us look at some of the features that will help you identify the type of company you can form in this state.

• Pass-through taxation – This is a great advantage and plays a key role in terms of taxes. If an entity has the pass-through taxation feature, then the profits and losses of such a company will essentially “pass-through” to the personal income of the owners. In a nutshell, the company will not be filing any federal taxes, but the owners of the company will have to file an income tax return.
• Limited Liability Protection – The second most important area to focus on is limited liability. Limited liability is a type of legal protection for owners of a certain type of entity, and it prevents owners or individuals of such entities from being held responsible for the company’s financial losses or debts.
• Ownership – Ownership is a key area as different types of structures have different ownership requirements and laws. For example, a C Corporation will have several shareholders considered the owners, while an LLC can have a single owner or multiple owners.
• Startup costs – Formation and operational costs can vary from one state to another and also according to the type of entity structure. For example, the cost to form an Ohio Corporation will be higher than the cost to form a sole proprietorship company. Simultaneously, operational costs will take into account the cost of licenses and permits, employees, marketing, etc.

Pros and Cons of Forming an LLC or Corporation in Ohio

The structure that you choose for your company will play a key role in influencing the formation, operations, taxes, and annual requirements in the state. The Ohio LLC cost per year or that of a corporation is one important cost component and needs to be considered when choosing the structure. If you are planning to form an LLC or a corporation in Ohio, then let’s quickly take a look at the various pros and cons of each structure, including the cost of forming an Ohio Corporation or an LLC.

Pros of an LLC or Corporation

• Members of a Limited Liability Company can choose how they can be taxed.
• An LLC can be treated as a partnership, corporation, or sole proprietorship from a tax perspective
• If you compare LLC vs Corporation in Ohio, then an LLC enjoys higher operational flexibility as compared to a corporation
• A limited liability company can be managed by a single individual or a group of people known as members
• A corporation can issue stock or shares, which act as a source of capital for handling company operations
• It is easy to attract investors or seek funding from venture capitalists in case of a corporation
• In a corporation, employee compensation can be in the form of stock options
• The cost to form Ohio LLC is lower than in most other states as you are not required to file an annual report in the state

Cons of an LLC or Corporation

• Corporations are known to have a rigid management structure as they need to have a board of directors and are required to hold annual shareholder meetings.
• Corporations are subject to double taxation, which means that income taxes must be paid twice on the same source of income.
• Corporations have a higher administrative burden as they are required to file extensive paperwork and maintain additional compliance with Ohio regulatory requirements.
• It is very difficult for an LLC to seek outside investors, and this type of entity cannot issue shares.
• Depending on the state of formation, LLC members are subjected to self-employment tax.

Ohio LLC Cost

One of the most favored entity structures in this state is a Limited Liability Company, and this is due to its salient features. If you want to register an LLC, then it is important to identify the cost of forming an Ohio LLC in advance. Let us take a look at the various expenses that you may incur in this state.

Cost for forming an Ohio LLC

The Ohio LLC cost per year takes into consideration one-time fees as well as recurring expenses. These are:

• The process of LLC formation and fee may be different from that of other entity structures in the state of Ohio. The first important cost is towards filing the Name Reservation / Transfer / Cancellation Application. There is a fee of $39.
• According to state laws, you must hire and maintain a registered agent for the service of process. The cost or fee will vary depending on the RA service you choose.
• The third and most important cost is forming Ohio LLC. You will have to file Articles of Organization along with a $99 filing fee. An additional fee is charged if you want to expedite the process.

Annual maintenance cost for Ohio LLC

Once you have registered a limited liability company in the state of Ohio; it is important to maintain compliance with all state annual requirements. The Ohio LLC cost per year for annual maintenance includes:

• Annual Report – Currently, a limited liability company in Ohio is not required to file an Annual Report, so there are no costs attached to this. If you form a Professional LLC, you will need to file a Biennial Report. The Ohio LLC cost per year or every two years will be $25.
• Taxes – A limited liability company in Ohio is required to file various taxes. Since the taxes have to be filed each year, filing them is an important component of the cost of forming an Ohio LLC and annual maintenance.
• Business Licenses – One of the important Ohio LLC costs per year is business licenses. This is a recurring cost, as licenses and permits have to be renewed each year. The fee will vary according to the license type and the number of licenses or permits an LLC requires.

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Ohio Corporation Cost

Most often, entrepreneurs prefer to incorporate in Ohio as this structure provides distinctive leverage over other legal structures in the state. If you are planning to establish a corporation, there will be two types of costs: the cost to form an Ohio Corporation and annual costs. Let us look at the different cost components for an Ohio Corporation.

Cost of Forming Corporation in Ohio

The cost to incorporate in Ohio is driven by several processes and is also dependent on whether you want to establish a domestic entity or a foreign company. The important costs related to incorporation in this state are:

• The first component of the cost to form an Ohio Corporation is name reservation. You will need to file the Name Reservation / Transfer / Cancellation Application. There is a fee of $39.
• You will also need to hire and maintain a registered agent for the service of the process. The cost or fee would vary according to the service chosen by you.
• The most important forming cost for Ohio Corporation is that of registration. You will have to file Articles of Incorporation along with a fee of $99. If you want to expedite the process, then there will be an additional fee varying from $100 to $300.

Annual maintenance cost for Ohio Corporation

Apart from the initial cost of forming Ohio Corporation, there will be other costs associated with the annual maintenance of your company. The costs involved are as follows:

• Annual Report – Currently, a corporation in Ohio is not required to file an Annual Report. If you choose to form a Professional Corporation or a Nonprofit Corporation then such a report becomes necessary. The annual maintenance cost of Ohio Corporation will be $25 for a Biennial Report or a Statement of Continued Existence.
• Taxes – A corporation in Ohio will be required to file different types of taxes. The type and tax rate will vary according to business activity.
• Business Licenses – Once you incorporate in Ohio, you will need to apply for and obtain business licenses and permits. The licenses have a cost component, which is considered a yearly recurring cost as they have to be renewed.

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Need any Assistance in Forming Your Ohio LLC or Corporation

Every business owner or entrepreneur has a different set of requirements when it comes to choosing an entity structure. The two most popular structures are that of a limited liability company and a corporation. The cost of forming an Ohio LLC or corporation and the annual maintenance costs may vary depending on several factors. We at IncParadise can provide valuable assistance by handling requirements pertaining to new business formation or incorporation in this state.