An important step in the formation of a business in Ohio is to determine the legal status of the business. The legal status of the business is the type of registration done for the business entity. A business can be registered as a sole proprietary, partnership, Limited Liability Company, S corporation or a corporation.
The licenses and permits to be obtained, the taxation and other formalities depend upon the legal entity of the business. For example, a LLC has a different set of rules for computation of taxable income and for running the day to day affairs of the company when compared to an S corporation and a partnership firm. One thing which is common for all types of business entities is to obtain an EIN number in Ohio.
A sole Proprietorship is a business owned by an individual, which is not registered as a Limited liability company. The owner and the business are treated as same for taxation and all other purposes. The owner of the company is solely responsible for all the actions of the company. While it is easy to start this type of company, it is a bit difficult to obtain capital funding from financial institutions and banks.
Partnership is another easy to form business entity. It involves two or more people, who come into a partnership agreement to start and run a business. They share profits and losses according to the terms determined in the partnership agreement and are jointly responsible for the actions of the company.
A Limited liability company is set up to protect the business owners from the debts and other legal liabilities of the business. The owners and the business are separate entities and the private property of the business owner is safeguarded from the liabilities of the company. It is easy to register a business as LLC. There are other business entities like S corporation, Corporation and co operatives to register a business.
Whatever may be the business structure of a business, one common step in the setting up process is getting the Tax ID number in Ohio. It is a mandatory requirement for all types of business to get other permits and licenses that are necessary for operating a business and to hire employees Ohio.