Are you thinking about starting an LLC in the State of Ohio?
Pursuant to Ohio Revised Code Section 1705.02, a limited liability company can be formed for any legal purpose including operating the company for profit or non-profit purposes. Ohio Revised Code Section 1705 provides a checklist of items that are required to be provided to the Ohio Secretary of State when a limited liability company is formed. Here’s a basic summary of the checklist.
Step 1: File the Correct Paperwork
The first step in forming a company is to file the paperwork with the Ohio Secretary of State. The form that needs to be signed is called the “Articles of Organization.” Pursuant to Ohio Revised Code Section 1705.05 it is critical that the Articles of Organization contain the following information:
1) the name of the company;
2) the period of its duration;
3) the address of the company; and
4) the written appointment and acceptance of the statutory agent (the statutory agent must be an Ohio resident who is the designated person where any correspondence from the Secretary of State is sent directly to this agent).
Step 2: Wait for Certification
After filing the Articles of Organization it usually takes 5-7 business days for the Ohio Secretary of State to recognize the entity and issue forms recognizing the company.
Step 3: Obtain a Tax ID Number from the IRS
After the certification page is received from the Ohio Secretary of State, it is critical that a tax identification number is obtained from the Internal Revenue Service. This can be obtained by applying with the IRS online at: www.irs.gov.
Step 4: Draft an Operating Agreement
Once a tax identification number is obtained, it is critical that an Operating Agreement is drafted for the new Limited Liability Company.
The Operating Agreement must contain the following items:
1) How to acquire property, make donations and investments;
2) The contributions of each Member and any promises for future contributions;
3) The allocation among Members of profits, losses, income, gains, deductions, credits, or similar items;
4) The distribution of cash or property;
5) The withdrawal of a membership interest;
6) The assignment of a membership interest;
7) The right of Members to receive information relating to a membership interest;
8) The retention of Members by management authority;
9) The right of Members to vote;
10) The authorization and responsibility of managers;
11) The indemnification of Members, Managers, and agents; and
12) The dissolution of a limited liability company.
A member is defined as a person who is an owner of the Company and shares in the profits and losses of the Company. (See Revised Code Section 1705.01) Each member of a limited liability company is responsible for all of its losses and deductions. (R.C. Section 1705.10).
Unless it is explicitly stated in the Operating Agreement, the management of a limited liability company is performed by its Members. Each Member of the company is responsible for carrying on the business of the company and is considered the agent of the Company whose acts bind the Company.
A manager of a limited liability company is liable for civil damages for any acts taken or any acts that he or she failed to take as long as it can be proven by clear and convincing evidence that the manager’s acts were undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. (R.C. Section 1705.25 and R.C. Section 1705.29).
Starting an LLC in Ohio?
Contact our firm with any questions you may have about forming an LLC in the State of Ohio.