Are you planning to launch a business in The Buckeye State? Ohio has a robust small business community featuring over 927,000 companies. These small businesses employ almost half (46%) of the state’s population.
Statistics aside, Ohio is rife with an entrepreneurial spirit. Two Ohio CEOs were named among the country’s top business innovators. Other wealthy business owners hail from the state, like Lex Wexner, the founder of clothing store The Limited, and the Lerner family, responsible for creating Bank of America.
If you’re ready to learn how to start your new business in Ohio, this state-specific guide outlines the key steps you’ll take.
Benefits of Opening a Business in Ohio
There are numerous benefits to incorporating a business in Ohio. One of the most significant advantages is the favorable tax laws. The state government doesn’t levy a corporate income tax, and it provides a 75% tax reduction to many small businesses on a company’s first $250,000 in revenue. This reduction is part of a massive three-year deal to reduce taxes by $2.7 billion, which is the most considerable tax reduction.
The Rust Belt State worked hard to reinvent itself when manufacturing jobs started to disappear. Over the last decade or so, Ohio has quietly become a hotbed for tech startups, playing home to companies that create everything from connected cars to health care products. Venture capitalists poured $1.6 billion into tech companies, and Ohio kicked in another $2 billion in funding since 2003 to reach these heights.
1. Create a Business Plan
Every Ohio business needs a plan. A business plan explains what the company is and how it will be profitable. There are many templates available online, but most include a company overview to explain your specific type of business, a list of SMART goals, and an analysis of competition. You’ll also want to explain the company’s target customers, how you plan to attract them, and the profit margins you’ll set.
When you write a business plan, also include a look at state-specific tax breaks or local grants. Ohio has a list of funding assistance for small businesses you can refer to.
2. LLC vs. Sole Proprietorship: Choose a Business Structure
One of the first decisions an Ohio entrepreneur must consider is how the business will be structured. There are several different business entity types, but sole proprietorship and a limited liability company (LLC) are among the most popular startups’ choices.
A sole proprietorship is a free, no-fuss option that entitles the company owner to all profits. It’s an unincorporated option, which means it’s not registered with the state, and the owner can be held personally liable for debts.
An LLC is registered with the state. In Ohio, the LLC formation paperwork is known as Articles of Organization. These documents must be filed with the Ohio Secretary of State, including a $99 fee. The most significant benefit of an LLC is its liability protection. The owner’s assets are separate from the business, so if the company is sued or ends up in debt, its assets are protected.
While entrepreneurs can file paperwork with the state to register their own company, ZenBusiness’s team of expert support staff can streamline the process for you.
3. Determine Your Business Costs
Whether you decide to set up a shop in Columbus or Cincinnati, take time to figure out your business costs. You can use a startup cost calculator to explore one-time charges along with ongoing expenses.
Part of your startup costs will include the cost to register your business and other state fees associated with business licenses or permits. Review Ohio’s licenses and permits to get an idea that you may need and the costs associated with each.
When it comes to ongoing expenses, your company may have a lease for commercial or office space. In Ohio’s capital city, Columbus, expect to pay around $18 per square foot, which is at historic lows. Cleveland has room between $16-$19 per square foot, and Cincinnati has similar costs. But in Cincinnati’s growing suburb of Kenwood, rates are higher at about $25 per square foot.
While accessing funds to cover business costs may take some time, it’s an essential step in the startup process, so include it in your detailed business plan.
4: Create a Business Name
Do you have a business name in mind? In Ohio, as in many states, no two companies can have the same name. So, do a business name search on the Ohio Secretary of State website.
Ohio also has specific rules about naming companies. No company name can have inappropriate language in it or reference a branch of government like the IRS. For a closer look at the rules, refer to the Ohio Guide to Name Availability.
The state also gives business owners the ability to reserve a name for 180 days before filing incorporation papers.
As you brainstorm ideas, consider looking into a domain name. A business formation company can help with the process, including when you choose to register a domain name to start building a digital footprint.
5. Register Your Ohio Business and Open Financial Accounts
If you’re ready to turn your business idea into reality, register your business structure with the state of Ohio. For an LLC, you’ll file LLC formation papers and pay a filing fee. You can do this yourself or work with a business formation company to complete the process.
Most businesses require a federal employer identification number (EIN) issued by the IRS for federal tax purposes. You’ll also register your business with the Ohio Department of Taxation, which you can do through the Ohio Business Gateway.
Also, look into insurance policies for your Ohio business. The state suggests that all startups look into liability, business, and auto insurance in its guide, Starting Your Business in Ohio.
Your business can benefit from having its bank accounts. In Ohio, two of the most popular banks are Huntington National and JPMorgan Chase Bank, but there are online business bank account options. These can also provide business credit cards to help with funding.
6. Market Your Ohio Business
Many Ohio businesses use a combination of digital and traditional tactics. Your marketing strategy will almost always revolve around your target customers. For example, if you’re trying to market to Ohio’s 391,000 college students, you’ll probably lean heavily on social media channels like Instagram, TikTok, and Snapchat. But if you want to attract Ohio’s growing senior sector, consider using Facebook.
Another way to market your business and stay plugged in to the community is to join Facebook groups like Ohio Small Business Owners.
Provided you’re opening a brick-and-mortar shop in Ohio, register its location with online directories like Google My Business so your business will start appearing in local searches.
There are several top-rated marketing firms in the state, like Growth Marketing Pro and Attache. They can help you put together a complete marketing and advertising strategy for your Ohio company.
Examples of Good Businesses to Start in Ohio
The largest employers in Ohio are health care businesses, manufacturers, and food services. A company that falls into any of these categories would fare well in the state, but Ohio is home to many businesses. You may also consider starting these companies:
- Tech startup
- Construction business
- Education services
- Senior support services
- Agriculture business
Ohio has a wealth of profitable business opportunities for entrepreneurs. The state boasts a business-friendly environment with a pro-business tax structure and several incentives to help companies thrive. While there are multiple steps involved in starting your own business in Ohio, it’s not hard to find resources to ease the workload.
Ohio Business FAQs
How much does it cost to start a business in Ohio?
Starting a small business varies widely, but research suggests that it costs about $30,000 to launch a company from scratch. In Ohio, there are specific costs to establish a business, one of which is a $99 filing fee to register an LLC.
What is an excellent city to start a business in Ohio?
You may consider setting up shop in one of Ohio’s fastest-growing areas like Hilliard, a suburb of Columbus, or Harrison, a suburb of Cincinnati. Affluent neighborhoods like Powell could be ideal for businesses offering premium products or services.
What is the cheapest city to open a business in Ohio?
A survey that ranked Ohio cities based on 19 business-friendly factors like five-year survival rate and office space costs ranked Columbus as the best Ohio city to start a business. However, the same study showed that Toledo might be the cheapest option since it has the most affordable office space.
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