How Much Does it Cost to Form a Limited Liability Company in Ohio?

By Salvatore Jackson

Ohio law permits the creation of limited liability companies, or LLCs. An LLC is a type of business entity popular among small businesses because it combines the limited liability protections of a corporation with the pass-through entity taxation and flexibility of a partnership. Organizing an LLC in Ohio requires paying an initial filing fee to the Ohio Secretary of State. Operating an LLC as a business requires paying other fees and taxes to the Ohio Department of Taxation.

Filing Fees

Organizing an Ohio LLC requires filing a document, called an articles of organization, with the Ohio Secretary of State. As of 2010, the filing fee for an articles of organization is $125. The Ohio Secretary of State accepts payment of the filing fee by check made payable to the secretary of state. If an LLC wishes to reserve a name before filing an articles of organization, the organizer of an LLC may file a name reservation with the Ohio Secretary of State. As of 2010, the filing fee for a name reservation is $50 to reserve a name for 180 days, and $25 to renew the reservation for an additional 180 days.

Commercial Statutory Agents

As part of filing an articles of organization, the organizers of an LLC must designate a statutory agent for service. The statutory agent for an Ohio LLC must be an Ohio resident or resident Ohio business. If a member or manager of the LLC is unwilling or unable to serve as the statutory agent of the LLC, a commercial statutory agent service must be retained. The cost of retaining a commercial statutory agent varies, but may cost about $100 per year.

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Commercial Activity Tax

The Ohio Department of Taxation assesses a Commercial Activity Tax, or CAT. Ohio LLCs with taxable gross receipts exceeding $150,000 must pay the CAT. Taxable gross receipts for the purposes of CAT include revenue from the sales of inventory, manufacture of items and the provision of services. For the 2010 tax year, the CAT rate is 0.26 percent of all taxable gross receipts. If an Ohio LLC generates more than $1 million annually in taxable gross receipts, an LLC must pay the CAT on a quarterly basis. If an Ohio LLC generates less taxable gross receipts, the CAT must be paid on an annual basis.

Franchise Tax

The Ohio Department of Taxation may also assess a franchise tax. The Ohio Department of Taxation is phasing out the franchise tax in exchange for the CAT. The Ohio franchise tax for LLCs is the greater of a minimum fee of $1000 annually, 5.1 percent of the first $50,000 earned by the LLC and 8.5 percent of any income earned over $50,000 or 0.004 percent of the net worth of the LLC. From the 2006 to 2009 tax years, the Ohio Department of Taxation has been slowly phasing out the Franchise Tax. From the 2010 tax year forward, an LLC does not have to pay any franchise tax unless they are a financial institution or insurance company.

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Comparison of LLC Fees Laws in Delaware Versus Wyoming

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What Can an LLC Deduct?

The only time a limited liability company is responsible for remitting federal income tax payments is if the members elect to treat it as a corporation for tax purposes. If the LLC members do not elect corporate tax treatment, each member is responsible for reporting a portion of the LLC's income and deductions. Regardless of how you classify the LLC for tax purposes, the business is eligible to deduct a wide range of business expenses.

Is a 1099 Required for an LLC?

A limited liability company, or LLC, is a relatively modern business organization that provides business owners with a great deal of flexibility in management and taxation. The IRS does not have a specific designation for LLCs, so owners may elect partnership taxation or corporate taxation. But the IRS does have requirements regarding independent contractors. Therefore, LLCs that use independent contractors or other professional services typically fall within IRS 1099 requirements.

How to Pay Taxes for a Limited Liability Corporation in Michigan

As a limited liability company in Michigan, you have tax obligations to the state and the IRS. Tax obligations for LLCs vary, depending on whether you sell or rent goods, or have employees. After registering to pay state taxes and determining the taxes for which your LLC is responsible, your business taxes may be paid online via the Michigan Department of Treasury website or by mail.

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