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Ohio LLC
Advantages and Disadvantages



Ohio LLC and Asset Protection

Ohio LLC:

An Ohio LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation, are generally prime candidates for a business juststarting. The state of Ohio gives public support to an Ohio LLC.

Persons wishing to form a Ohio Limited Liability Company must file articles of organization with the Secretary of State (Form 115-LCA). The business organization must be for-profit. At the time the articles are filed, a form having the appointment and acceptance of appointment of the Statutory Agent and a filing fee of $125 must accompany the articles. The address to mail the articles to is P.O. Box 1329, Columbus, OH 43216. If expedited service is desired, see the information above on how to expedite the filing.



Should I form a Ohio LLC?

An Ohio LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Ohio to your LLC. Your Ohio LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Ohio LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.

Advantages and Disadvantages of a Ohio LLC

Advantages of Limited Liability Company
  • Limited Liability: Owners of a LLC have the limited liability protection of a corporation.


  • Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.


  • No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.


  • Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.


Disadvantages of Limited Liability Company


  • Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.


  • Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.


  • Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.


By Ohio and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Ohio LLC members, the name and address of your Ohio registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Ohio LLC formation documents assembled for application to the state of Ohio.

Ohio’s Business Tax Climate Ranks 49th

Ohio ranks 49th in the State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Indiana (12th), Pennsylvania (22nd), West Virginia (34th), Kentucky (39th) and Michigan (27th).

Ohio’s Corporate Income Tax Rate is Among the Highest in the Nation

A gross receipts-style tax, the Commercial Activity Tax (CAT) was implemented in 2005. It will be phased in through 2010, while the Corporate Franchise Tax (Ohio's corporate income tax) is phased out. The CAT rate for tax year 2006 is 40% of .26% or .104%. During tax year 2006, Ohio companies owe 60% of Corporate Franchise Tax liability.



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