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What are the steps involved in forming a limited liability company (LLC) in Ohio and what are the advantages of doing so?

Picture of Chris Battis By   ·  1 minute read

To form a limited liability company (LLC) in Ohio, the following steps must be taken:

  1. Choose a name for the LLC that complies with Ohio's naming requirements. The name must not already be in use by another Ohio LLC or corporation, and it must contain the words "limited liability company" or an abbreviation, such as "LLC."
  2. File Articles of Organization with the Ohio Secretary of State. This document officially creates the LLC and provides the state with basic information about the company, such as its name, address, and registered agent.
  3. Obtain any necessary licenses and permits. Depending on the nature of the LLC's business activities, additional licenses and permits may be required at the federal, state, or local levels.
  4. Draft an operating agreement. Although not required by Ohio law, an operating agreement is highly recommended. This document sets out the rules for how the LLC will operate, including management structure, profit distribution, and dissolution procedures.
  5. Obtain an Employer Identification Number (EIN) from the Internal Revenue Service. This number is required for tax purposes and is used to identify the LLC on tax returns and other government filings.

The advantages of forming an LLC in Ohio include limited liability protection, flexible management structure, and pass-through taxation. Limited liability means that the owners of the LLC are not personally liable for the company's debts and obligations. The LLC can also choose to be managed by its owners (called a member-managed LLC) or by outside managers (called a manager-managed LLC). Pass-through taxation means that profits and losses are passed through to the owners' personal tax returns, rather than being taxed at the company level.

It's important to note that forming an LLC may not be appropriate for every business situation. For example, certain professionals, such as doctors and lawyers, may be prohibited from organizing as an LLC. Additionally, the LLC's limited liability protection may be undermined if the owners do not observe proper corporate formalities or engage in wrongful conduct. As such, it's a good idea to consult with an attorney to determine whether an LLC is the best entity choice for your specific situation.