Ohio LLCs

[Catherine]

Anything weird in the Ohio rules on LLCs that I should be aware of? Clients who moved to Ohio last year are thinking of starting a small sideline business. Don't even know yet if it's just him, just her, or a joint venture between them. Only expected to generate a couple thousand in income per year - for a while, anyway.

I know that in MA the only practical thing an LLC does for a small business is add a $520 annual filing fee to the fun. But I don't know if Ohio is similar, or if there are actual advantages. Any info/advice appreciated. Even just a link to the pertinent spot to read up myself.

[Margaret CPA in OH]

Hi Catherine, Generally there is nothing special other than the usual registration on the Secretary of State with Articles of Organization https://www.ohiosos.gov/businesses/   Check the last box about Revised LLC Act as of Feb. 2022. For the clients this might help https://ohio.gov/business/resources/business-first-stop

SMLLC is just Sch. C and no special filing as Ohio income tax begins with federal AGI.  There is a 'big' exclusion of business income for taxes up to $25,000, though.  If MMLLC, then 1065 and, as a pass-through entity, there may be additional requirements for out of state members.  It can get a bit complicated. 

So this is a start and follow up depends on what the clients decide to do.  That, of course, will lead to the right research path.  Good luck!

Oh, just be aware of the multiple municipalities that all want to tax so the location of their business is important to know.

[Jim Oh Bkkr]

And school districts?  I don't deal with S/D's much, so I'm not sure about "business" liabilities.

[JimTaxes]

The business exclusion on the Ohio side is up to $ 250,000, not $ 25,000. 

[Margaret CPA in OH]

Thanks, Jims, for updates.  I did omit that extra 0 on the business exclusion (details, details) and I even have it on my own returns.  Businesses do not pay school district tax https://tax.ohio.gov/researcher/tax-analysis/tax-data-series/school.district.income.tax    

[JimTaxes]

Margaret. just a heads up on school returns since I do a lot of them.  A few years ago or so if someone l ived in an Earned Income School District, their self employment income is taxed for school district tax.  At one time it was not but they changed that a while ago.  For Traditional School Districts self employmnet income is inded exempt from school tax. This starts on page 4 of the pdf that you linked. 

[Margaret CPA in OH]

Thanks for this additional information.  I used to have many SD 100's but now just one.  The take home is to also know which base the SD uses and they do differ.  Like all the muni's, another PIA!

[Catherine]

Many thanks to you both, @Margaret CPA in OH and @JimTaxes! Talking with the client tomorrow morning.