How To

How to keep your Ohio LLC compliant

By Joseph West , Jun 26, 2020 05:37 PM EDT
(Photo : Bigstock)

After formation, an Ohio LLC must comply with various laws.

To conduct any kind of business in Ohio, an LLC must comply with the laws and regulations put in place by federal, state, and local governments. In order to stay compliant, the business may appoint a professional statutory agent or appoint one of the members as statutory agent. That way, the statutory agent keeps track of all the compliance issues.

Compliance with permits and licenses

A business license is an official certificate that authorizes a business to carry out its operations in a particular geographical jurisdiction. It validates the company's registration with the state, county or city where it's located. It is advisable to research what permits and licenses are required for the type of business that the LLC is into. The two major categories of business licenses are Federal and State.

The federal license is necessary when the company operates in either a very specialized industry or one with a high level of liability. Examples are running a gun shop, an alcohol joint, a fishery, or moving live animals across state borders. For information on federal permits and licenses, LLC members should read the U.S. Small Business Administration (SBA) guide available on the SBA website.

A state license is required to carry out commercial activities within a specific locale. The rules and regulations may differ depending on whether the company operates within the city limits or not. For information about state permits and licenses, LLC members should access the Licenses and Permits section of the State of Ohio's business website.

To get information about local permits and licenses, the members can ask the local county offices or the local chamber of commerce.

The fees for such licenses and permits vary depending on the type needed. Visit TRUiC to find out how to acquire the required licenses and permits for an LLC in Ohio, when they expire and how to renew them.

Compliance with taxation laws

An Ohio LLC is required to register for one or more types of taxes. The LLC's accountant must make sure that the taxes are paid according to the law.

Federal taxes

The first thing that an LLC must do soon after being registered is to get an Employer Identification Number (EIN) from the Internal Revenue Services (IRS). This is the number that will be used to identify the business for tax purposes. The LLC will use it when it pays over all taxes withheld from employees. The number is also needed by banks when opening an account.

The Ohio LLC has to submit its annual income report to the IRS. If it's a single-member LLC, it uses Form 1040 Schedule C, and if it's a multi-member LLC it uses Form 1065 Partnership Return.

State taxes

The LLC must also apply for a state EIN. This will be used for paying commercial activity taxes (CAT) on a quarterly basis. The CAT is based on gross business receipts and the amount payable depends on the gross receipts when they exceed $150,000. Information on the submission dates is available from the State of Ohio's Department of Taxes.

Sales tax

Sales tax or 'Sales and Use Tax', is a tax levied by the state, county, and municipality on transactions that involve taxable goods and services. If an LLC deals with physical products, it has to register for a seller's permit online by accessing the Ohio Business Gateway website. It will get a certificate that enables it to collect sales tax on taxable sales and submit them to the government. TRUiC has a resourceful website that gives a clear guide on sales tax for people who intend to set up an LLC in Ohio.

Employer taxes

If the LLC has employees, it is required to register for Unemployment Insurance Tax via the Department of Job and Family Services in Ohio. It should also use the Ohio Business Gateway to register for Employee Withholding Tax. Then it must properly withhold employee taxes and pay them over to the IRS.

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