Starting a small business in Ohio often means registering with several federal, state, and local agencies. Let’s review common Ohio business license registrations so your business starts off right.
Related: Guide to starting a business in Ohio
Setting Up the Business
Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of structure:
Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.
General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.
Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.
Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.
Related: Comparison of Business Structures
What Licenses Do Ohio Businesses Need?
With the business structure out of the way, we can begin looking at the different types of registrations businesses in Ohio may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.
General Business License
There is no general state of Ohio business license, however, many cities require businesses to be licensed. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.
- Columbus: The City of Columbus requires certain businesses, such as restaurants, daycares, salons, and barbershops, to obtain a business license to operate in Columbus.
- Cincinnati: Some businesses will need to register with the Cincinnati Department of Finance & Budget to do business within city limits. A few of these businesses include antique dealers, food establishments, skating rinks, and more.
- Toledo: Businesses such as dance halls, junk yards, mobile food vendors, tow trucks, and more will need to obtain licensing.
- Akron: An Akron Business License is required for certain types of businesses operating within the city’s corporate limits, such as alarm installers, firearm dealers, ice cream trucks, and more.
For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements.
Trade Name Registration
While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a company name that is different from the full name of the owner(s) to register for a Trade Name (also known as a Doing Business As, DBA, or Fictitious Name) with the Ohio Secretary of State.
Building & Zoning Permits
Zoning Permit: Most Ohio businesses should check zoning requirements from their local zoning department to ensure the proposed use complies with local ordinances. Zoning requirements vary between cities and counties, so businesses should consult their local zoning authority for specific requirements and procedures.
Building Permit: Building permits are required for new construction, additions, alterations, and repairs to structures in Ohio. Permit applications are submitted to the local building department, and the process includes plan review and inspections to ensure compliance with state and local building codes, ensuring the safety and structural integrity of the building.
Signage Permit: Ohio businesses must obtain sign permits from their local government before installing exterior signage to ensure compliance with local sign ordinances, which regulate the size, location, and design of signs. Sign permit applications are typically submitted to the local building department or zoning department.
Ohio Vendor’s License
Ohio law requires any person or business making taxable retail sales or services to register for an Ohio Vendor’s License with the Ohio Department of Taxation. Retailers with a fixed place of business may also apply for a vendor’s license with their County Auditor.
Commercial Activity Tax
Businesses with total revenues of over $150,000 in a calendar year must register for the Commercial Activity Tax (CAT) with the Ohio Department of Taxation.
Sales Tax Exemption Certificate
Businesses purchasing merchandise to resell will usually want to obtain an Ohio Sales Tax Exemption Certificate (often referred to as a Resale Certificate) in order to not pay sales tax for merchandise that will be resold to customers.
Professional License
A variety of occupations in the state are regulated and require registration, such as appraisers, bait dealers, contractors, exterminators, salons, and many more. The state of Ohio provides additional information, fees, and licensing requirements for these professions.
Employer Identification Number (EIN)
Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual.
Next Steps
These are some of the most common business licenses a new business in Ohio will need to register for. While it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.
