Ohio is a great state to start your business in because it offers cost-effective commercial space, a skilled and top-quality workforce, and zero percent corporate income tax, which enables companies to thrive. Launching a business in Ohio may seem daunting. However, the process is simple. This article outlines seven steps of starting a business in Ohio.
1.Create a business plan
A business plan is a strategic and essential tool for business owners. It helps you focus on the steps crucial for your business ideas to succeed and enables you to achieve your long-term and short-term objectives. While a business plan might seem insignificant to some entrepreneurs, it's a great resource, especially when raising funds for the company. Potential lenders and investors need a properly written business plan to decide whether to give you money. It’s a way to communicate with lenders to secure investment capital.
With a business plan, you can convince others to work for you and get credit from suppliers. It enables you to define and concentrate on your business strategies and ideas. A business plan allows you to spot potential weaknesses in your ideas.
2.Register your business with the Ohio secretary of state
Incorporating your business helps you avoid personal risks and liabilities. It protects your personal assets from getting seized to pay debts owed by the company while ensuring you can't be held personally liable for the obligations unless you have guaranteed the debt. The law deems an incorporated business as a separate legal entity, meaning it has privileges and rights.
Business registration promotes credibility and allows you to enjoy tax benefits. Since the requirements for registering a business may differ based on whether your business structure is a sole proprietorship, limited liability company, general partnership, corporation, or limited liability partnership, research or a visit to the local municipality can help you establish what you need to register your company.
3.Select a business name
A business name defines who you are, identifies what you're offering, helps impress investors, and creates a way for customers to find, recommend, and talk about you. It forms the trademark design foundation, which can have significant value when you want to sell your business or franchise. A good business name is great for your first impressions with target customers and can help you communicate your strategy.
When choosing a business name, stick to your state's guidelines, select a name that customers can pronounce and spell easily, and make it memorable but unique. Ensure your name isn't similar to your competitor's to avoid confusing customers. An Ohio secretary of state business search can help you determine if the business name you’re considering is available so you can reserve it.
4.Obtain an EIN (Employer Identification Number)
As a new business owner, it’s your responsibility to obtain an EIN, a distinct nine-digit number for identifying your company for tax purposes. You’ll require an EIN when opening a business bank account, filing your returns, and applying for business licenses. Consider applying for your EIN during the planning phase of your business, avoiding delays when looking for the financing or appropriate permits you might need to operate your business.
Your business will need an EIN if it retains employees. Nonetheless, you may require an EIN if you aren't an employer but operate as a partnership or corporation. You can visit the IRS site and its resources to see who needs an EIN.
5.Get the necessary business permits
Based on the nature of your company, you may be needed to acquire additional business permits or licenses before opening your business. The permit requirements come from the federal or state government or the local municipality. You may need a:
- Sales or vendor tax permit if your company will sell taxable services or products to gather sales tax
- Local municipality license, which is a general operating permit that your business may need to run, and you can get it from the city or county you operate within
- Federal license if opening an industry
- Additional local licenses based on what you sell
6.Open a business bank account
Opening a business bank account when starting a new company can be rewarding. Your EIN will help you open a bank account. With a business bank account, you can automate tax preparation and bookkeeping. It enables you to separate personal and business assets, protecting you from being held personally liable for company debts incurred.
A business bank account comes in handy when the IRS is looking to determine whether you’re operating a legitimate business. It’s also an excellent way for your business to build credit, making it easier to get a business credit card with favorable interest rates. A bank account makes your company look more professional and makes it easier to apply for government support or borrow money for your business.
7.Insure your business
Business insurance, including commercial property and health insurance, is a legal requirement that safeguards your employees, customers, and management and protects against natural disasters. It's essential because it protects your business against possible mishaps that may result in closure. It also gives you peace of mind that your business is protected in case of any eventualities.
Endnote
While launching a business might seem complicated, a proper procedure makes it simple. Consider following these steps when starting a business in Ohio.