Wondering how to start a business in Ohio? The state is one of the Midwest’s largest small-business markets, with a diverse economy spanning manufacturing, healthcare, technology, and professional services. It’s a state with a well-established registration process, making it an accessible starting point for first-time business owners.
What you’ll learn
What you’ll learn
Key takeaways for starting an Ohio business
- To launch an Ohio business, you must select a legal structure, register your entity with the state, appoint a statutory agent, and set up your tax accounts.
- Ohio is recognized as a top state for small businesses, levying a Commercial Activity Tax (CAT) on gross receipts over $6 million instead of a traditional corporate income tax.
- Employers must register with the Ohio Bureau of Workers’ Compensation to protect their business operations and employees.
While the paperwork might seem overwhelming at first, registering a business in the Buckeye State is straightforward when you take it one step at a time. To help you get your operations up and running, we’ve mapped out the process below — starting with choosing the right business structure for your goals.
Choose a business structure and name
The first step to launching a business in Ohio is to choose the legal business structure and name for your organization. Your options are as follows:
- Limited liability company (LLC): An LLC is a popular option for many small businesses in Ohio. This business structure protects your personal assets from potential business debts. Owned and operated by one or more individuals, an LLC typically requires minimal paperwork and simplifies taxes for your Ohio-based business.
- Corporation: A corporation is a separate legal entity that works well for larger businesses seeking venture capital or wanting to issue stock. Shareholders own the company, and it is subject to more stringent rules and regulations than an LLC.
- Sole proprietorship: A sole proprietorship is an unincorporated business owned and run by one person. It’s important to note that with this business structure, you and the business are one and the same, meaning your personal assets will be at risk if your business incurs debt or faces lawsuits. Many consultants and freelancers opt for this structure.
If you have questions about choosing a business structure, it’s always smart to consult with a business attorney and/or accountant for tax and legal advice.
Register your business with the Secretary of State
- The next step is to select a name for your business and register the company with the Ohio Secretary of State. To ensure your preferred name is available, conduct a quick search using Ohio’s business entity search tool.
- Use the Ohio Business Filings portal is a helpful resource with step-by-step instructions on how to register your business with the Secretary of State. The portal also offers a guide to starting a business, with additional resources and information.
- You’ll need to pay a $99 filing fee through the Ohio Business Central portal as part of the registration process.
Appoint a statutory agent and get an EIN
It’s important to note that Ohio requires businesses to appoint a statutory agent, also known as a registered agent. This is your official point of contact who is designated to receive legal notices on behalf of your company.
Legal requirements for a statutory agent in Ohio are as follows:
- The agent must have a physical address in Ohio. A P.O. box is not acceptable.
- The agent must be present at the named address during standard business hours.
- The agent can be an individual Ohio resident or a registered business entity that is authorized to serve as an agent in the state.
You can also serve as your own statutory agent. However, many businesses opt for a third party to ensure greater flexibility and privacy.
In addition to naming an agent, you need to apply for a Federal Employer Identification Number (FEIN) through the Internal Revenue Service. Similar to a Social Security number, an EIN is a unique nine-digit number that identifies your business on a federal level.
Unless you operate your business as a sole proprietorship, you need an EIN to hire employees, pay taxes, administer retirement plans, and address other matters. You can apply for an EIN online through the IRS. It’s a free process and only takes a few minutes.
Understand Ohio state and local tax requirements
Ohio has the Commercial Activity Tax (CAT), which is an annual privilege tax imposed on companies doing business in Ohio.
Some important information about the Commercial Activity Tax is outlined below.
- The CAT is based on gross receipts in Ohio.
- For tax years 2025 and after, businesses with more than $6 million in gross receipts must pay this tax.
- The CAT is taxed at .0026 percent of gross receipts.
- Your business must keep records on CAT payments for four years.
- Since the CAT is considered a cost of doing business in Ohio and is not a transactional tax imposed on your customers, like sales tax, it can’t be separately billed/invoiced and recouped.
In addition to complying with CAT requirements, your business may need to get a vendor license, which allows you to legally sell goods and collect state and local taxes in Ohio. There is a one-time $50 fee for a vendor license.
“Ohio’s local municipalities have varying tax structures, with tax rates typically ranging from 1 to 3 percent. More than 600 cities levy local income taxes in Ohio. Additionally, many counties and regional transit authorities add their own local sales taxes.”
— Tom Brock, CPA, CFA, and OnPay contributor
It’s critical to understand tax rates and local provisions wherever you do business to make sure your business remains in compliance. You can always check with the local county clerk for more information or consult with a business accountant and/or attorney.
Set up Ohio workers’ compensation insurance
It’s mandatory to register with the Ohio Bureau of Workers’ Compensation, which will protect both you and your workers in the case of a workplace incident or accident. Unlike some other states, you cannot get private workers’ comp insurance.
Your business must set up Ohio workers’ compensation insurance if you meet any of the following criteria:
- Have one or more full or part-time employees
- Are an independent contractor or a subcontractor with employees
- Serve as a corporation with multiple owners and officers
- Are an out-of-state employer bringing employees to work in Ohio for 90 consecutive days or more
You can apply for an account online. You must post your Certificate of Ohio Workers’ Compensation in a visible location in your business when you receive it. For a deeper dive into this critical compliance matter, take a look at our guide to Ohio workers’ compensation insurance.
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— Richard Wright, In A Minute Concierge Ltd
Register for Ohio employer and payroll taxes
Your Ohio-based business must also register for employer and payroll taxes. You can learn more and register through the Ohio Department of Taxation’s OH|TAX eServices portal.
You must register within 15 days of compensating an employee. To do so, you need the following information:
- Your Federal Employer Identification Number
- The legal name of your Ohio business
- Business email address
In addition, your business must report every employee and independent contractor to the Ohio New Hire Reporting Center within 20 days of the date of hire.
If you choose to expand your business structure beyond a default limited liability company or sole proprietorship — such as electing S Corporation status with the IRS — your company will face specific federal filings and payroll responsibilities to remain compliant. The table below can help you keep tabs.
| Filing or requirement | What employers need to know | Anything else? |
| Business entity registration | S Corp status requires filling out Form 1120-S with the IRS to establish pass-through taxation rules for shareholders. | Handled immediately upon starting operations. |
| Reasonable owner compensation | S Corp shareholder-employees active in day-to-day operations must pay themselves a market-rate W-2 salary. | Tracked continuously to align with IRS requirements. |
| Quarterly payroll tax filings | Use Form 941 to report federal income taxes, Social Security, and Medicare withholdings. | Submitted to the IRS on a quarterly schedule. |
| Annual payroll tax returns | Fill out Form W-2 for all employee wages and Form 940 to account for federal unemployment taxes. | Distributed to team members and filed every year-end. |
While launching a business involves navigating a number of moving parts, establishing your own concept can be very rewarding. No matter which entity path you select, keeping your back-office details organized sets you up for long-term success.
Finalize your Ohio business operations
After addressing everything discussed above, you can establish a commercial bank account for your Ohio operations and get ready to open for business. OnPay can help you establish efficient and effective automated payroll for your Ohio employees. We also offer the latest information on how to 1099 someone and the ideal time-to-hire for small businesses. Reach out to OnPay today to streamline your HR processes and avoid potential compliance pitfalls.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.