If you want to start and run a Ohio limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Ohio LLCs.
Unlike most states, Ohio does not require LLCs to file annual reports.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.
Ohio, however, has a Commercial Activity Tax that applies to most Ohio business entities including LLCs. The tax is based on gross receipts for your business and is calculated at a small series of marginal rates. You are liable for the tax if you have gross receipts of $150,000 or more. The minimum tax amount is $150. If you owe this tax, you must register with the Ohio Department of Taxation (DOT) by filing Form CAT 1 or registering online through the Ohio Business Gateway (OBG). Once registered, you should receive information about how often you need to file returns (quarterly or annually). Use the OBG to file your CAT returns.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate federal tax return. In Ohio, LLCs choosing to be taxed as corporations, like other LLCs, are required to pay the commercial activity tax.
For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll probably need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Ohio employers also must pay employee taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOT. Begin by registering your business with the DOT online, by phone, or on paper (Form IT 1). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example, monthly or quarterly) typically using Form IT-501. You'll also need to use IT 941 each year to reconcile your LLC's tax withholding.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Ohio Department of Job and Family Services (JFS). You can register for these taxes online or on paper (using Form JFS-20100). Then, on a quarterly basis, you'll need to file Form JFS-20125 with JFS. For more information, check JFS website.
If your LLC will sell goods to customers in Ohio, you will need to collect and pay the state's sales tax. You must register for this purpose with the DOT. You can do this on paper (Form ST 1) or online through the Ohio Business Gateway (OBG). Once you've registered, you'll be sent a vendor's license. Then, on a periodic basis (monthly, quarterly, every six months), you must file a sales tax return. Again, this can be done on paper (Form UST-1 or Form UUT-1) or online through the OBG. For more information, check the DOT website.
If you will be doing business in states other than Ohio, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Ohio, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.