The 7 legal steps you need to take to start your small business in Ohio

You may have a great business idea, but you don’t know where to begin. These are the 7 things you need to do from a legal perspective to start your small business in Ohio.

  1. Form a limited liability company (LLC) with the Ohio Secretary of State. This takes 10 minutes, and it’s a great first step whether you’re starting a business for yourself, or going into business with others. It is important that you shield your personal assets from the debts and liabilities of your business, and forming an LLC is a great way to do that.  In the eyes of the law, an LLC is a separate entity from you personally.  Therefore, if your LLC is sued in the future, only the assets of the LLC—and not your personal assets—are at risk.  Additional benefits of LLC’s include pass-through taxation (they are treated like sole-proprietorships), heightened credibility and minimal state compliance regulations.  In Ohio, an LLC is created by filing Articles of Organization with the Secretary of State.  The cost is only $99.
  2. Create an operating agreement. An operating agreement outlines how your LLC will operate and function. It outlines the ownership, how profits & losses are dealt with, how decisions are made, and much more. It’s also a key document because it helps to show that you are running the LLC as a separate entity and not as an extension of you personally. Get a good business attorney to draft this document for you–it will save a lot of headaches down the road!
  3. Draft resolutions for your LLC. Because the LLC is a separate entity from you personally, the LLC needs to give authority to individual people to do things like start a bank account, make decisions, and hire officers. Resolutions that you keep in your corporate records can accomplish this.
  4. Open a bank account under the name of your LLC. It’s important that your LLC’s revenue goes into your LLC’s bank account so you don’t commingle funds. You also need to pay your bills & expenses out of your LLC’s bank account. This, again, shows that you are running your LLC as a separate entity and not an extension of you personally.
  5. Consider an umbrella insurance policy. Every small business should buy general liability insurance.  These traditionally broad policies insure against the risk that the insured may cause injury to clients or other third parties.  You will need to check with a broker for quotes, but umbrella policies for most small businesses is usually quite affordable.
  6. Consider what kinds of contracts you’ll need. Do you have employees? Consider whether you should have them sign non-compete or confidentiality agreements. Do you have customers? Consider what kinds of contracts your customers should sign upon doing business with you. Do you have suppliers or vendors? Make sure you are reviewing those contracts with regularity. It’s smart to have an experienced business attorney review and/or draft your contracts so you are well protected.
  7. Be nice! This is the number one piece of advice I give my small business clients (and all my business clients).  The best protection you can give yourself is to be friendly and accommodating.  Even if you occasionally err, clients who like you will almost never sue you.
  8. Please feel free to reach out to me at if you want to discuss how to best manage risk in your small business. The above blog post is not legal advice and should not be construed as such.  Every business is different, so business owners should consult an attorney to determine which solutions might work best for them.

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