Starting a Business in Ohio
Ohio has one of the friendliest pro-business climates in the nation. The Buckeye State has approximately 850,000 small businesses and about 225,000 of those have employees. There are many advantages to starting a small to medium sized company in Ohio. Many of these businesses prosper from factors such as a fair tax and regulatory system (although obtaining business licenses can be a hassle sometimes) and the loyalty and support from local communities. Ohio has diverse industries such as Healthcare, Aerospace Systems, Agricultural, Steel and Iron production companies, Educational Services, and Auto Manufacturing businesses. Ohio businesses can benefit from many available programs and incentives to help them succeed. The most notable of these are tax reductions through the application of abatements and tax credits, and for companies who physically situate themselves inside a State designated Enterprise Zone.
STEPS TO STARTING A BUSINESS IN OHIOStarting a business in Ohio now may be a great option, although making the right decisions can be crucial to success. You can look up an Ohio sales tax rate to pay Ohio sales tax, file a form ST1 and perform an Ohio corporation search. An Ohio corporation search is conducted at the Ohio Secretary of State so you can choose a business name for your company. The system also verifies if a company is in good standing. The Ohio Department of Taxation regulates the Ohio commercial activity tax. There are some administrative filing tasks that must be completed once you have registered a company with the Ohio Secretary of State. These will include applying online for an Ohio Vendors License (Seller’s Permit) which will be used in order to collect sales tax as well as file returns. Another extremely important compliance activity that must be addressed is finding the appropriate Business Licenses to operate. Many different laws have been changed in recent years regarding the collection of sales tax for vendors who make out of state sales. You may need to apply for an SST streamlined sales tax permit if you meet nexus as a remote seller. Once all compliance tasks are addressed, you can study the different incentive benefits available to Ohio businesses. Here are some of the available programs:
- Ohio’s standout job incentive programs are collectively known as the Jobs Ohio Grant and Loan programs. They are made up of the Growth Fund Loan, Workforce Grant, R & D grant and the Economic Development Grant.
- The Growth Fund Loan is available to businesses that have attempted to secure more traditional financing sources with limited success. Funds will be made available to companies that are attempting to expand and have a proven track record.
- Qualifying businesses that are attempting to grow may be eligible for the Workforce Grant Program. Under the program, companies with qualified projects that facilitate the creation of new jobs in the state are eligible for funding to help improve the skillsets of employees.
- For businesses that are willing to open new centers dedicated to research and development, grants will be made available. To qualify, a company must be operational at least five years and meet minimum annual income thresholds. The grants can be used toward funding of the new facilities.
- The final grant program is the Economic Development Grant which allows a qualifying business to use funds to support infrastructure, equipment and machinery, and building improvement or acquisition costs.
- One notable industry specific tax credit available to Ohio businesses is known as the Motion Picture Tax Credit. It is available to a qualified entertainment company engaged in the production of a state certified production project located in Ohio. The credit can be taken against payroll expenses due in the same year the production project occurred. Credits are equal to 35% of resident and 25% of nonresident payroll production expenses respectively.
- The Ohio Enterprise Zone Revitalization program offers businesses tax incentives on real property. These exemptions and credits are offered to foster economic growth and incentivize businesses to relocate to economically depressed areas in Ohio. This program is absolutely necessary for economic stability as eight out of ten of Ohio’s largest cities are economically depressed.
- The Ohio Energy Loan Program is a financing incentive available to companies in order to help them lower energy expenses. To qualify, a business must meet specific energy reduction thresholds that will have a long term effect on the surrounding community.
- Ohio Sales Tax Exemptions are offered on machinery or equipment used in manufacturing operations to qualified manufacturing businesses as well as that used in the research and development process. Additionally, there is a data center tax exemption which gives a Sales and Use Tax Exemption to a data center business that meets minimum payroll or investment criteria. Exemptions can be taken against data center equipment as well as the energy costs to run it in daily operations. A sales tax permit is needed for the above exemptions.