Are you ready to start your own business?
Starting your own business in Ohio might be challenging. However, you can achieve your business goals with the appropriate capital, time, personal support, and professional help.
You don’t have to be scared if you don’t know how to get started. This guide will walk you through all you need to know before opening a business in Ohio. Stay with us!
Choose a Business Idea
The first stage of establishing a business in Ohio is conceiving a good business idea. You need to develop a business idea that fits your personal goals, interests, and natural abilities. This will help you stay motivated even when the business isn’t going well. However, you can explore the internet to get detailed information on trends and the startup cost of the business you’d love to start.
Write a Business Plan
Once a good business idea is available, you can start working on a business plan.
Several business owners only consider creating a business plan because financial institutions like banks request for them before disbursing funds. Asides from funds acquisition, a business plan conveys ideas from the head of an entrepreneur, and it helps create a direction that they want the business to follow. The way most building constructors wouldn’t build a structure without blueprints, it is not ideal for an entrepreneur to start a business without a good business plan.
Related: How to write a business plan
Select a Business Entity
The next step required to start a business in Ohio is choosing a business entity. A business entity is also known as a business structure, which defines how a business or company is legally organized. There are four basic business entities. They include partnership, sole proprietorship, corporation, & Limited Liability Company (LLC). Below is a brief description of each of them.
A Sole Proprietorship is an individual owner of a business. Moreover, this is the simplest and cheapest of the four entities, and it requires no state filing. The benefit of a startup is a large selling point. However, a significant disadvantage of the sole proprietorship is that the business and its owner are the same entity legally. Consequently, the owner is liable for all business actions and debts. If the company is sued, the business owner’s assets are exposed to risk. Another downside of a sole proprietorship is that the business owner must pay self-employment tax on the generated income, which may be more expensive than the other entities.
General Partnerships involve two or more persons running a business together. This business offers unlimited liability like the sole proprietorship. For example, the personal properties of each partner are also at risk if a court issue arises. However, the partnership does not pay tax from the business’ revenue. Rather, losses and profits are passed via owners’ personal tax returns.
Although it may not be required, it is vital to file your Statement of Partnership Authority with the Ohio Secretary of State to run a business in Ohio. In addition, some vendors and banks may request this filing as proof of partnership. This Statement of Partnership Authority costs $99.
A Corporation is a structure that stands as a distinct legal entity. Corporations are more expensive and challenging to establish compared to sole proprietorship & partnerships. The major benefit of a corporation is that it protects the personal asset of the owners whenever the business is sued. The disadvantage of this business structure is the compliance policies and administrative obligations. These include creating a board of directors, conferences for directors & shareholders, the appointment of a registered agent, and many others.
There are numerous ways a corporation can choose to be taxed. These include the S-corporation and C-corporation. Choosing how this business entity should be taxed can be pretty complicated, so ensure that you contact your CPA in case of double taxation where earnings and dividends are taxed. Additionally, corporations are not affected by self-employment tax, which benefits owners.
The Limited Liability Company (LLC) is a famous business structure because it offers the protection of a corporation and the sole proprietorship’s simple business operations. Furthermore, the LLC does not feature several of the burdens seen in the corporation, and it offers the biggest tax flexibility among all four entities.
Related: How to choose the right business structure for your business
Build Your Business Website
After deciding on a name and a business plan, the next step is to design a website for your business. While developing a website is an important step, some may be concerned that it is out of their grasp because of the lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years that have made the life of small business owners much easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine business has a website, period. When it comes to bringing your business online, it doesn’t matter what size or industry it is.
Social media profiles, such as Facebook profiles or LinkedIn business profiles, are not a substitute for a business site that you own and manage.
Website builder programs, such as the GoDaddy Website Builder, have made it relatively simple to build a basic website. You don’t need to pay a web developer or designer to make a website you’re proud of.
Related: How to build an amazing website for your business
Branding and Marketing
The most popular and prominent businesses we created on a trustworthy trademark. When creating your brand, it is essential to consider the following.
- What are your business objectives?
- How will you express your core values?
- How will you earn the trust of your customers?
Once you’ve found the answers to the questions above, you need to re-examine your business name. An ideal business name is the foundation of a good brand & a successful business. See our How to Name a Business guide to know more about developing an ideal business name.
You need to get the word out after you’ve got the perfect brand name. Develop a marketing plan for your products & services to attract potential customers. View our ultimate guide to business marketing for more information.
Get Your Federal Employer Identification Number
An EIN is like an SSN (Social Security Number) for businesses. Moreover, this is required for LLCs and Corporations. It is also important for your business to acquire an EIN to save your business from identity theft. You can either apply through IRS Form SS-4 or online to get an EIN.
Register Your Business
After choosing your business structure, it’s time to get your business registered. This procedure may seem complicated. Therefore, you have to ensure that you have all the required resources and papers available in case you need some help during the process.
Furthermore, this procedure varies depending on the kind of business you want to start. For instance, the process required to form an LLC may be easier than that of a corporation. Either way, it will be best to seek the service of a registered representative who can put you through the process.
The Ohio Secretary of State website provides an easy list of the forms you’ll be required to fill out. It also features an analysis of the costs of each document. Afterward, you’ll be eligible to proceed with all the necessary paperwork. Do well to seek help if you encounter anything confusing. Also, it is a good idea to have a list of Ohio business resources as you process the paperwork.
Ohio business taxes
While designing your company plan and processing paperwork, you must ensure that you’re familiar with the taxes associated with firms. However, these taxes may be relatively different from what you may have previously seen or heard.
As mentioned, your taxes may vary depending on the type of business you own. For example, any business that employs workers must regard items like employer withholding & severance pay. Due to this, it will be best to ensure that you understand the taxes associated with your business.
You may uncover a list of important business taxes on the official website of the Ohio Taxation Department. Here, you’ll find explanations on various taxes. Then, you can go through these explanations to understand them better.
It is important to note that the different categories of taxes mentioned above can also be divided into small portions. This will help you create a detailed picture of each tax associated with your company. Also, this is essential when estimating the total expenses.
Open Bank & Credit Accounts For Your Business
To separate personal and business expenses, you need to open a different bank account for your business. Also, obtaining credit cards is a good way to develop a business credit profile. This way, you can be eligible for bigger loans and credit lines. To register an account for your business, simply contact your bank to know more about the account opening process. Normally, you’ll have to deliver your filed paperwork, your company’s EIN, and an enterprise resolution licensing your business to register the account.
Create An Accounting System
It is important to set up an accounting and record-keeping system when starting a business. This way, you can keep all necessary business documents for as long as possible. These documents include copies of all formation documents, a list of all owners & addresses, annual reports, financial statements, and annual reports. In addition, all Tax and Corporate Filings should be kept for a minimum of 3 years.
Hire Employees (if applicable)
If you plan to hire yourself or other people as a part or full-time employee in your business, you need to register with the relevant State Agencies. You may also need to obtain Unemployment Insurance Workers Compensation Insurance (or both).
Once you’ve created your team, we recommend using a payroll service to track time, issue paychecks, and manage tax seasons.
Systemize and Organize
It will be best to organize your business to be easy to run if there is a need for someone else to handle it on your behalf. This implies that you need to have a method to pay bills, process orders, pay employees, maintain your permits, pay taxes, etc.
Endeavor to make the functional part of your business as automated & efficient as possible to develop and monitor the growth of your business.
Establishing your own business can be time-consuming, but it can also be quite rewarding. This is especially true if you’ve spent a significant amount of time planning and mapping out your organization’s operations. Good luck, and enjoy your first steps toward starting your own business in Ohio.
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