Starting a business requires more than just a good idea. You need to legally structure your business, and ensure it’s registered with both the federal and state-level government. Fortunately, it’s easier than ever to get the registration and tax ID you need.
Steps to getting a Tax ID (EIN) Number and Register Your Business in Ohio
- Ohio Means Business
- Forming a Business in Ohio
- Federal Tax ID (EIN) Number Obtainment
- Ohio State Tax ID Number
- Localized Licenses and Permits in Ohio
Ohio is an ideal state for entrepreneurs looking to start a business. Nestled in the heart of the Midwest, Ohio serves as a middle ground between big cities like New York and Chicago, and boasts an impressive number of big cities of its own, including Cleveland, Columbus, and Cincinnati. In Ohio, you’ll find a lower-than-average cost of living, and more than 927,000 active small businesses. And because the state’s massive population is distributed in big cities, mid-sized cities, and rural areas alike, you’ll have no shortage of options of where to start your business.
Depending on where you go, you may also have access to grants, credits, and other initiatives designed to attract more entrepreneurs to the area. For example, Columbus is home to numerous small business organizations, all of which exist to help businesses like yours succeed.
Once you’ve decided on the nature of your business, you’ll need to decide how to structure your company. There are many types of businesses for entrepreneurs to choose from, including sole proprietorships, partnerships, limited liability companies (LLCs), and corporations (including C-corporations and S-corporations).
In terms of simplicity, sole proprietorships and partnerships can’t be beat. You can start almost immediately, and you won’t have to file any ongoing paperwork like annual reports. The downside is that these types of businesses leave you, the business owner, vulnerable to legal action.
A more popular choice in Ohio is an LLC. LLCs aren’t as complicated as corporations, but offer more liability protection than a sole proprietorship or partnership. They’re treated as a separate legal entity, which means you’ll be tracking the assets and debts of the company, rather than your own. You can withdraw a salary or profits (in the form of dividends) any time you’d like, at which point you’ll pay taxes on what you withdraw. In Ohio, you won’t have to file an annual report for your LLC, though you may be subject to a corporate income tax if you earn above a certain threshold.
Corporations are another option to consider. They’re more complicated than LLCs, but offer much more liability shielding. They’re also responsible for paying taxes on eligible income, which means you might end up being double taxed on that income; once when the company earns it, and again when you withdraw it. If you plan on taking the company public, and issuing shares to raise funds, a corporation is practically the only way to go.
After you’ve decided on a formal business structure, your next step will be getting a federal tax ID, otherwise known as an employer identification number (EIN). There may be some rare cases where you can get by without an EIN, such as if you’re running a sole proprietorship with no employees and minimal contact with other entities, but for the most part, all businesses should have one.
This number serves as a unique identifier for your business, similar to your social security number (SSN). You’re responsible for using it on all kinds of applications, including applying for business credit with another organization, or starting your first business bank account. It’s also a good way to protect your business against identity theft; you can use your EIN instead of your personal SSN when dealing with external service providers.
Getting a federal tax ID is a multi-step process, but there’s an easy way to get yours. If you use our service, we can get you a federal tax ID for your Ohio business in just a few hours- and we only need a few pieces of information about your business to get started.
While you’re at it, you’ll need to get a specific state tax ID for your Ohio business. As you might imagine, your state tax Id will function like your federal tax ID, except it will apply to matters of the state, rather than at a national level.
If your business makes more than $150,000 in the state of Ohio, or if you have total receipts over $1 million, you may be responsible for paying Ohio-specific taxes. Your state tax ID will be used to keep track of these figures, so you can pay appropriately at the end of the year. Some major cities, such as Columbus, also require you to file city taxes at the end of the year. While we’re on the subject of taxes, you should also know that Ohio forces businesses to pay excise taxes on certain types of products; you can find the full list here.
If you’re looking for a fast way to set yourself up with a state tax ID, we also have a service for Ohio state tax ID procurement. Contact us today, and we’ll start the process, so you can have your Ohio state tax ID in a day or less.
Before you get much further in the business creation process, you should know that no matter where you start your Ohio business, you may be required to get a license or a permit. These range from small, fee-based licenses that are easy to acquire, to large, procedurally difficult licenses that could land you in legal trouble if you operate without them.
Most of these licenses and permits apply at the local level, so research your specific city before you set up shop. A quick check-in to your local Chamber of Commerce, or a discussion with a fellow entrepreneur can point you in the right direction.
Once your Ohio business is registered with the federal government and the state, you’ll be ready to begin operations. Get started with our federal tax ID and Ohio state tax ID obtainment services, so you can get there even faster!