It’s time to take a shine to the Rust Belt: in what was once the heart of America’s manufacturing region, Ohio is now home to almost 1 million small businesses and boasts the seventh largest economy in the nation.
Those entrepreneurs contributed to the state’s miraculous recovery, and the growth is likely to continue with new ventures like yours. To join their ranks and become an Ohio business owner, all you have to do is follow the steps below.
How to start a business in Ohio
- Create an Ohio business plan
- Name your business in Ohio
- Check Ohio zoning requirements
- Choose an Ohio business structure
- Register your business in Ohio
- Set up business bank accounts
- Find startup funding
- Research Ohio licenses and permits
- Purchase Ohio business insurance
- Automate your business
- Research your Ohio tax obligations
- Grow your team
1. Create an Ohio business plan
A business plan is a document that helps you formalize your business idea and outline things like costs, growth goals, and competition, so you have a strategy to guide you through the startup process.
A well-crafted business plan can help you:
- Calculate startup costs and ongoing business expenses
- Crystalize your business strategy
- Analyze your competition and hone your competitive advantage
- Identify potential customers
- Create short- and long-term marketing strategies
- Look for additional revenue streams
- Identify funding sources
- Attract investors and apply for business grants
Need help writing your business plan? Ohio Small Business Development Centers produced a guide called Starting Your Business in Ohio that contains a helpful business planning questionnaire. The federal Small Business Administration (SBA) also offers a free business plan template.
2. Name your business in Ohio
If you register as a sole proprietor in Ohio, you can use your legal name as your business name. This option is also available to general partnerships. All other business structures, such as LLCs and corporations, must create a business name that satisfies all requirements in the Ohio Secretary of State Guide to Name Availability.
If you would like to use a different name than your registered business name, you can apply for either a trade name or a fictitious name, collectively referred to as assumed names. In Ohio, a trade name registration, also called a “doing business as” (DBA) name in some states, gives you exclusive rights to use that name. A fictitious name is not protected from use by other organizations.
How to name a business in Ohio
- Check to see if your preferred name is being used by searching the Ohio business name database.
- If your chosen name is available, claim it when you register your business.
How to reserve a business name in Ohio
You can reserve a business name in Ohio for 180 days through the Ohio Business Filings portal for a filing fee of $39. Consider this option if you aren’t ready to register your business name yet, but you want to make sure no one else takes it.
3. Check Ohio zoning regulations
Zoning laws prevent harmful or disruptive businesses from impacting neighborhoods where people live and work. Chances are good that your operation will be restricted by zoning regulations based on your business address in Ohio—even mobile and home-based businesses can be impacted by zoning—so it’s essential that you understand the rules that apply to you.
In Ohio, zoning is not set by the state. Each municipality or county determines its own zoning regulations, so you’ll need to check with your local government’s zoning office for more information. For example, if your business will be located in Columbus, zoning is controlled by the City of Columbus Zoning Code.
4. Choose an Ohio business structure
Business owners in Ohio must choose a legal structure to register. This registration will determine things like how your operation is organized and managed, how profits are distributed, and how your income is taxed. A business structure is also known as a legal structure, legal entity, and business entity.
Choosing a legal structure can be complicated so it’s a good idea to read our guide to business structures, then work with a CPA or business formation consultant to determine which structure is right for you.
You can choose from one of six business structures in Ohio:
- Sole proprietorship
- General partnership
- Limited partnership
- Limited liability partnership
- Limited liability company (for-profit and nonprofit)
- Corporation (for-profit, nonprofit and professional)
More detailed information on each type of entity is available in Starting Your Business in Ohio.
5. Register your business in Ohio
In order to register your new business, you’ll need to file several forms and pay the associated fees, all of which can be accomplished via the Ohio Business Filings portal. The steps that you’ll need to take to register your organization will vary depending on your business structure, but you can expect to complete the following.
- Elect or hire a statutory agent. This is an individual or corporation with a physical address in Ohio that is responsible for receiving and distributing legal communications on behalf of your business. In some states this is called a registered agent. You can learn more about statutory agents from the Ohio Secretary of State.
- File forms. Depending on your legal structure, you will need to file several forms via the Ohio Business Filings portal.
- Apply for a Federal Employer Identification Number (FEIN or EIN). This is a federal tax registration requirement. You can sign up with the IRS. You’ll need an EIN for paying taxes, setting up business bank accounts, and hiring employees.
Whichever business type you plan to register, the business formation process can be complex—full of legal documents, tax forms, and government regulations—so we recommend hiring a business formation service or CPA to help you.
How much does it cost to register a business in Ohio?
The cost of registering your new business in Ohio can vary depending on your chosen business entity, trade name needs, and more. However, most businesses can be registered starting at $99.
6. Set up business bank accounts
A business bank account may be a requirement of your legal structure. But it’s also a good idea to keep your personal and professional finances separate because it will be much easier to complete accounting tasks and file your taxes when you can understand which money belongs where.
You’ll need the EIN you created with the IRS in order to set up business bank accounts. Your EIN works like a social security number for your business.
Open a business checking account to handle day-to-day transactions and manage business income. A savings account to set aside profits or save for tax season. And a business credit card for convenience and to build a positive credit rating for your organization.
Be sure to shop around for the best deal before opening an account. Many financial institutions offer different business products and rates that may be helpful to your business.
7. Find startup funding
Some new entrepreneurs have the cash on hand to start their businesses without any financial help. But many small businesses need a boost at the beginning in order to get off the ground. Be sure to include a realistic calculation of capital requirements in your business plan so that you are ready to apply for funding when you find it.
Consider these funding options if you need financial assistance:
- Equity partners
- Friend or family loan
- Small business loans from your bank
- Government grants
- SBA loan or grant
- Angel investment
8. Research Ohio licenses and permits
There is a good chance that you will need licenses and/or business permits at the federal, state, and local levels. These regulatory requirements will vary depending on the type of business you are starting.
To determine the licensing requirements that apply to your business, check these information sources:
- Federal. For federal regulation, check the SBA’s licenses and permits page.
- State. While the State of Ohio does not require you to obtain a business license separately from your business registration, the state government does administer professional licenses and permits as well as permitting for sales of certain items, such as alcohol. The state also requires most businesses to obtain a vendor’s license or seller’s use tax account, which is part of the state tax system.
- County. County-specific business licenses and permits could apply to your business, so don’t forget to check with the county clerk in your area for more information.
- Local. At the local level, consult city hall or the local chamber of commerce to learn about and apply for business licenses and permits. For example, licensing in Cincinnati is handled by the City of Cincinnati.
9. Purchase Ohio business insurance
Every business needs insurance, even if there are no products to steal or property to damage. Unexpected legal issues can arise in many ways. Insurance is the best way to protect your personal assets and increase your level of liability protection.
Here are some types of business insurance you may need for your service business:
- Worker’s compensation coverage. Applicable if you intend to hire employees.
- Property insurance. Do you own the building where you do business? You might need property insurance.
- Automobile insurance. Many service providers are mobile, so their vehicles must be insured as part of their businesses.
- Professional liability insurance. In the course of your business operation, you may encounter claims of negligence, copyright infringement, personal injury, and other liabilities related to your services. Professional liability insurance can protect your assets.
For more details on insurance, check out our guide to small business insurance.
10. Automate your business
Administrative tasks are essential to a successful business, but they tend to take up a lot of time that could be better spent elsewhere. Fortunately, you can use business software to free you up for other activities.
Streamline these back-office tasks with software:
- Invoicing. Use a free invoicing software to automate the invoicing process, accept credit card payments, and get paid on time.
- Review management. A great online reputation doesn’t just appear, you have to build it. Durable provides a free review management software to help you source customer reviews and deal with client issues before they get out of control.
- Customer relation management. Knowing your clients is a key factor in building a successful business. A customer relationship management (CRM) tool allows you to track details about your clients, so you never miss an opportunity to close a deal. Durable’s free CRM automates many of these types of interactions and helps you stay organized.
- Scheduling. If you book appointments with clients as part of your business, you know that it can be a headache. Take the pain out of scheduling with an automated tool like Calendly or MeetFox.
If there are other business processes in your operation that seem like they could be automated, chances are you’re right. Don’t hesitate to search online to see if someone has already built a tool that would be helpful to your business.
11. Research your Ohio tax obligations
Just like you need to pay personal taxes, your business needs to deal with an array of business taxes. If you’re not an accountant, you should hire a CPA to understand all of the tax requirements that apply to your business—federal taxes, state taxes, payment deadlines, and more. A professional’s expertise will cost you in the short-term, but it can save you plenty of time, money, and hassle in the long run.
Here are some key business tax obligations in Ohio:
- Sales tax. The Department of Taxation levies a 5.75% sales and use tax.
- Commercial activity tax. If your business will make more than $150,000 annually, you’ll need to pay the Commercial Activity Tax (CAT).
- Withholding tax. If you have employees, the state requires you to withhold at least 3.5% from their paychecks for the purpose of paying income tax.
- Local tax. The state permits local governments to charge additional sales tax above the sales and use tax of 5.75%, so be sure to check with your local tax office.
- Product tax. Some specific products require additional taxes, such as liquor.
Additional tax and filing information is available from the Ohio Department of Taxation.
12. Grow your team
When your business is just starting out, it may be ideal for you to work solo. However, as your business grows, you may need to add human resources to keep things running smoothly. Many small business owners choose to work with independent contractors as a first step since hiring employees is accompanied by additional administrative work.
If you decide you need employees, make sure your business is compliant with all employer responsibilities and labor laws at the state and federal levels.
Keep these key employer responsibilities in mind:
- Obtain an EIN. You must have an EIN from the federal government to hire employees.
- Notify the state government. You need to report a new hire within 20 days to the Ohio New Hire Reporting Center.
- Verify employee eligibility. Once you start meeting with potential employees, you’ll need to verify that they are eligible to work in the United States by having them fill out this form.
- Worker’s compensation. All businesses in Ohio with one or more employees must have worker’s compensation coverage.
Ready to start a business in Ohio?
Ohio’s business community is welcoming entrepreneurs like you to help keep the ball rolling on the state’s incredible economic recovery. With a business-friendly atmosphere and no corporate income tax, Ohio might be the ideal place to start your next great success. Just follow the steps in this guide to learn how to start a business in Ohio. And once your business is set up, stick around and give Durable a try.
Durable is a free platform with everything you need to start and grow a service business. Build your business website in minutes, and make invoicing, customer management, and review management a breeze.
Try Durable today—it’s free!