Ohio LLC Operating Agreement
The Ohio LLC Operating Agreement is the core document that is referred to when issues concerning an Ohio limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your Ohio LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of Ohio.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of Ohio will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your Ohio Limited Liability Company
LLC Filing Office
Entity or Franchise Level Tax
In general, partnerships and LLCs treated as partnerships are not subject to the Ohio franchise tax. However, a pass-through entity with at least one qualifying investor that is not an individual is subject to an entity-level tax that is similar to a withholding tax.
Effective July 1, 2005, Ohio requires business
entitles, including partnerships, LLCs taxable as partnerships,
and disregarded single-member LLCs, with taxable gross receipts
of $150,000 or more in a calendar year, to pay a commercial
activity tax (CAT), measured by gross receipts, for the
privilege of doing business in the state. The business entity must pay $150 for gross
receipts between $150,000 to $1 million.
The rate is phased in over the next five years in
20 percent increments and is subject to adjustment by the
Ohio Tax Commission if revenue collections of the tax are
10 percent or more greater or lesser than projections.
State LLC Act
The Ohio LLC Act is contained in Title XVII, Chapter 1705 of the Ohio Statutes.
Important Statutory Rules
An LLC is managed by its members unless the Operating Agreement states that the LLC is to be managed by one or more managers.
Admission of Members
Unless otherwise provided in the Operating Agreement, new interests in the LLC must be issued with the written consent of all the members. Unless otherwise provided in the Operating Agreement, the admission of a transferee as a member must be approved by the unanimous consent of all non-transferring members.
Amending the Operating Agreement
No statutory rules exist for amending the LLC Operating Agreement. The Operating Agreement shall govern how it shall be amended.
Unless otherwise specified in the Operating Agreement, unanimous written consent of all members is required to voluntarily dissolve the LLC.
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