- April 11, 2023
- Posted by General Electric Credit Union
- 10 read
A Comprehensive Guide to Launching a New Business in Ohio
In 2021, 181,586 new business ventures launched in the Buckeye State.1 Starting a business in Ohio is an exciting endeavor – one you may be planning to take on in the near future! But there are a few steps you must complete first. Below are a few that are relevant to the state of Ohio.
9 steps to starting a business in Ohio
1. Create a business plan
A business plan serves as a roadmap to accomplishing your financial goals – but its role doesn’t end there! You can share your business plan with potential lenders or investors to help them see your growth potential and get on board for funding. A business description, market research, and financial projections are items to consider including.
2. Structure your business
You have options when it comes to structuring your business and the choice you make will impact both your personal liability and how you file taxes. Use the chart below to familiarize yourself with the most common business structures.
|Business structure||Ownership||Assets and liability||Taxes|
|Sole proprietorship||One person||Business assets and liabilities are considered personal||Business profits and losses are reported on a personal tax return|
|Partnership||Two or more people||Differs based on the type of partnership||Business profits and losses are reported on each owners’ personal tax return – additional requirements differ depending on the type of partnership|
|Limited liability company (LLC)||One or more person(s)||Owners are not personally liable for the debts or liabilities of the LLC||Generally, business profits and losses are reported on a personal tax return|
|Corporation||One or more person(s), with specific requirements||Owners are not personally liable for the debts or liabilities of the corporation||Corporation taxes and losses are recorded on form 1120|
Learn more about how to structure a business in our quick guide.
3. Register with the Ohio Secretary of State
Registering your business name with the Ohio Secretary of State ensures it’s not currently in use and that it remains solely yours. Once registered, the name can’t be used by any other company in Ohio. Forms to register your business are available online. You can also call 877.SOS.FILE.
4. Apply for a license(s)
You’re required to register for a Vendor’s License if you’ll be making taxable retail sales or services in Ohio. Additional requirements may differ depending on the city or the industry your business falls under, so do your due diligence and confirm your licensing needs prior to making any sales.
H3: 5. Get an EIN
An Employer Identification Number (EIN), or Federal Tax Identification Number, is used by the IRS to identify a business entity. The benefits of having an EIN include:
- Keeps you in tax compliance. Some business structures, as well as any business with employees, are required to have an EIN to file taxes.
- Allows you to set up payroll. Again, having employees means you need an EIN. The EIN is used to set up payroll and the IRS will refer to your EIN to track payroll taxes.
- Opens the door to business bank accounts. Many financial institutions prefer you have an EIN when applying for business bank accounts. Having one on the books means you can start shopping around for the best business checking accounts, credit cards, and more!
There are situations in which an EIN is not required but forgoing one may cause you to miss out on the benefits (including the ones listed above!).
6. Open a business bank account
Comingling personal and business funds is not advised because it complicates tax time and could even jeopardize the legal protections afforded to you as the owner of an LLC or corporation. That’s because, from a financial standpoint, you and the business will appear the same. Instead, brainstorm the accounts you need to make your business successful and silo the funds. Your list may include:
- A business checking account
- A business savings account
- Business credit cards
- Business loans
- Business certificates
At General Electric Credit Union (GECU), our Business Services team is comprised of passionate individuals tapped into the local business market. They’ll get to know you and your business to match you with the right accounts and solutions.
7. Know the sales tax requirements
All Ohio businesses are required to collect and remit sales tax. The only exception is marketplace sellers using platforms that collect and remit sales tax on their behalf, like Etsy. You should file sales tax electronically through the Ohio Business Gateway. Refer to the ODT website for the current payment schedule.
- NOTE: The information provided in this guide is general and accurate as of April 2023. Contact the Ohio Department of Taxation directly if you have questions about the sales tax requirements unique to your business, as they may differ.
8. File income tax
The type of business you form will determine how you file income tax and what forms you use. Consult a qualified business tax professional to gain a better understanding of what you can expect.
Watch Tax Law for Small Businesses, a free, on-demand webinar featuring steps to take as a new business, write-offs, and what to look for in a Certified Public Accountant.
9. Protect your business
Bad actors will try to take advantage of new businessowners through scams involving freely available workplace posters, ransomware, and more. Refer to our small business scams guide so you’re privy to the methods they use.
Keep the financial goals of your new business on track with the Best Credit Union in Cincinnati. At GECU, you’ll feel the difference in our local approach, competitive rates, and a dedicated Business Online Banking platform.1 Contact our Business Services team and set up a time to walk through your venture’s needs, goals, and dreams. We can’t wait to be a part of your business’ journey!