Business Lawyers in Columbus, Ohio
By Drew Stevens - August 14, 2019 - Corporate & Business
As a Columbus, Ohio business attorney, some of the more routine questions I field are whether to form a corporation or an LLC; how do corporations differ from LLCs; and how do you properly form a corporation in Ohio.
In our previous posts, we’ve covered how to form a Delaware LLC and how to form an Ohio LLC. Here, we’ll cover what goes into starting a corporation in Ohio.
If you’ve talked to a Columbus business law attorney or have been researching the differences between corporations and LLCs, you’ve probably come across the term “corporate formalities”. While setting up an LLC can be relatively straightforward, forming a corporation can take some extra steps and corporate action. Be sure not to try and steam role through some of these corporate formalities as some are necessary steps to properly forming your corporation.
If your startup is filing its corporation in Ohio, you’ll start with the Articles of Incorporation and filing those with the Ohio Secretary of State. At the time of writing this post, the filing fee is $99 and the form is Ohio Secretary of State form 532A.
The articles of incorporation ask for a variety of information regarding your corporation. Naming restrictions include that you must use “inc.”, “incorporated”, “corp.”, “corporation”, “company”, or “co” as a part of the name.
You must also list a principal office location, which must be in Ohio. For this, you must specify the county and the city. This principal office location can be different than your statutory agent address.
The statutory agent is the mailing address at which any kind of legal service or notice will be sent. This address will become public information. If you do not want to list an address of your own, there are statutory agent services that charge an annual fee to serve as your statutory agent. Also consider asking your Columbus business lawyer to be the statutory agent.
As with all other entities, spend the time to search to make sure there isn’t a company already registered with a name that is substantially similar. If you are very committed to a particular name, you find that such name is not yet in use, but you are not ready to file, do keep in mind the corporate name can be reserved by filing a reservation with the Ohio Secretary of State.
The Ohio Articles of Incorporation also ask about the shares issued by the company and any initial capital. With share information, keep in mind that the corporation can authorize up 990 shares with no additional fee.
If a corporation authorizes shares beyond 990, the corporation will be assessed a fee for each additional share it issues, depending on the total number of shares authorized. It may be prudent to use the Ohio Secretary of State shares calculator and review the fee information page before deciding on a number of shares. The maximum total filing fee can be $100,000.
If, after filing the articles of incorporation, the corporation later increases the total number of shares authorized, the corporation must pay an additional fee. The fee is only assessed on the total number of new shares and does not factor in the previous shares issued.
In terms of other information, you must stipulate the types of shares, the par value of each share, and the initial capital. With the type of shares, you must specify what kind of shares you are issuing, such as common or preferred. With the par value of each share and the initial stated capital, you can put “0” for both.
If you have never filed a corporation in Ohio before, do not hesitate to contact a Columbus business attorney at our firm today.