Learn about the annual report and tax filing obligations for Ohio limited liability companies.
If you want to form and operate an Ohio limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant continuing reporting and state tax filing obligations for Ohio limited liability companies.
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Report Annual
In contrast to the majority of states, Ohio does not require LLCs to produce annual reports.
State Corporate Taxes
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income taxes by default; only its members do.
However, Ohio has a Commercial Activity Tax that applies to the majority of Ohio business organizations, including LLCs. The tax is determined at a limited series of marginal rates and is dependent on your company’s gross revenues. If your gross revenues are $150,000 or more, you must pay the tax. The bare minimum tax is $150. If you owe this tax, you must file Form CAT 1 with the Ohio Department of Taxation (DOT) or register online via the Ohio Business Gateway (OBG). Once enrolled, you should get instructions on how often you must submit returns (quarterly or annually). To submit your CAT returns, use the OBG.
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be treated as a corporation, unlike the typical pass-through tax arrangement, the firm must submit a separate federal tax return. LLCs that elect to be taxed as corporations in Ohio, like other LLCs, must pay the commercial activity tax.
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you will very certainly be required to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Ohio companies must additionally pay state employee taxes.
To begin, you must withhold and pay employee income taxes to the DOT. Begin by registering your company with the DOT, either online, over the phone, or on paper (Form IT 1). Once registered, you must submit withholding taxes on a regular basis (for example, monthly or quarterly) using Form IT-501. Each year, you’ll also need to utilize IT 941 to reconcile your LLC’s tax withholding.
You’ll also need to register to pay state unemployment insurance (UI) taxes. The Ohio Department of Job and Family Services is in charge of these taxes (JFS). These taxes may be registered for online or on paper (using Form JFS-20100). Then, on a quarterly basis, you must submit Form JFS-20125 to JFS.
The sales tax
If your LLC sells items to clients in Ohio, you must collect and remit sales tax to the state. You must register with the DOT for this reason. This may be done on paper (Form ST 1) or online through the Ohio Business Gateway (OBG). After you register, you will get a vendor’s license. You must then submit a sales tax return on a regular basis (monthly, quarterly, or every six months). Again, you may complete this on paper (Form UST-1 or Form UUT-1) or online through the OBG.
Other States Registration
If you want to do business in states other than Ohio, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.