It is essential that you incorporate your business by either forming a Corporation, Limited Liability Company, or Limited Partnership. The reason why we create these legal entities for our small business owners is because we are shielding them from personal liability. If someone slips and falls in your business or one of your employees who is operating one of your company vehicles is involved in a car accident, you can avoid yourself from being personally responsible to a third party by establishing one of these entities.
Corporation vs. LLC
A Corporation is a legal entity that has its own existence and is separate and apart from the shareholders’ involvement. If you own a Corporation, the Corporation is responsible for all of its contractual obligations, debts, and liabilities. The Corporation can purchase property in its name and can enter into its own contracts.
A Limited Liability Company or Limited Partnership, like a Corporation, also has its own existence and can enter into its own Contracts, own its own property, and can independently participate in its business affairs.
Where to Start
To establish your new Company, you must first file documents with the Ohio Secretary of State. It is important to provide all of the relevant information, including your Company’s name, its owners, and the address where it does business. Once this document is filed, it can take between three to five business days to receive a certification page that recognizes your new Company name and confirms your company’s formation date.
After receiving the Certification Page from the Ohio Secretary of State, you must obtain an EIN—employee identification number—from the Internal Revenue Service. The IRS allows you to obtain this EIN number online. You will need to go to IRS.gov and answer a few questions to obtain the EIN. This process normally takes less than fifteen minutes to complete. Once you have completed answering all of the questions, the IRS will provide a PDF version of your new employee identification number. When you answer the questions for the IRS, it is important that you have your certification page that is provided to you by the Ohio Secretary of State, which includes the designated state registration number for your Company.
After you have obtained your certification page from the Ohio Secretary of State and your Employee Identification Number from the IRS, you can establish a bank account with your bank for your new Company.
Operating Documents
Lastly, it is critical that you ensure that your Company complies with all of the Ohio Revised Code provisions that document that your Company is actively engaging in day to day business. You need to prepare a Company notebook that outlines in detail all of your Company minute notes. An Operating Agreement needs to be drafted that outlines all of the ownership percentages of each owner and outlines all of the governing rules for your Company and provides all of their duties and responsibilities.
If your company has several shareholders or members, we recommend having agreements that outline the terms and conditions agreed to by the owners. This may include Buy/Sell Agreements, Non-Compete Agreements, and Non-Solicitation Agreements.
Ready for Launch?
If you need assistance making your new business a reality, The Law Office of Tom Somos, LLC is here to help. Feel free to contact us today.
