Ohio LLC Taxes
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How an Ohio LLC is taxed: federal pass-through treatment, self-employment tax, Ohio income and entity taxes, and the payments to plan for.
An Ohio LLC is taxed at three levels: federal income tax on the profits, Ohio state rules, and payroll or sales taxes that depend on what the business does. Ohio taxes personal income, so LLC owners report their share of profit on a Ohio return in addition to the federal one. Ohio also has an entity-level tax to plan for: Commercial Activity Tax.
Federal tax treatment
By default the IRS treats a single-member LLC as a disregarded entity, so profit is reported on Schedule C of the owner's personal return. A multi-member LLC is taxed as a partnership and files Form 1065, with each member receiving a Schedule K-1. Either can elect to be taxed as an S corporation (Form 2553) or a C corporation (Form 8832). See the IRS page on LLCs.
Self-employment tax
Members who work in the business generally pay self-employment tax of 15.3% on net earnings: 12.4% for Social Security up to the annual wage base set by the SSA, and 2.9% for Medicare with no cap, plus an additional 0.9% Medicare tax at higher incomes. An S corporation election can reduce this for profitable businesses, but it requires running payroll and paying yourself a reasonable salary. Our LLC vs S-Corp comparison walks through the trade-off.
Ohio state taxes
| Tax | Ohio treatment |
|---|---|
| State personal income tax | Applies to owners' share of LLC profit |
| Franchise or entity-level tax | Commercial Activity Tax |
| Annual report fee | None |
Sales tax, payroll tax, and local business taxes sit on top of these. If you sell taxable goods or services, register with the Ohio tax agency for a sales tax permit. If you hire, you will register for state unemployment insurance and withholding.
Estimated tax payments
LLC owners usually have no employer withholding, so they pay federal estimated tax each quarter, and Ohio estimated tax as well. Missing estimates can trigger underpayment penalties, so many owners set aside a percentage of every payment they receive.
Ohio specific notes
Ohio does not require LLCs to file an annual report. The Commercial Activity Tax (CAT) applies only to businesses above its gross-receipts exclusion, a threshold that has been raised in recent years.
Ohio LLC at a glance
| Item | Detail |
|---|---|
| Filing office | Ohio Secretary of State |
| LLC filing fee | $99 |
| Annual report | Not required |
| Franchise or entity tax | Commercial Activity Tax |
| State personal income tax | Yes |
| Corporation filing fee (for comparison) | $99 |
Tax rules and thresholds change, and this page is general information. Confirm details with the Ohio tax agency and a licensed CPA before you file.
Frequently asked questions
Does a Ohio LLC pay state income tax?
Is there a franchise tax for Ohio LLCs?
How is a Ohio LLC taxed federally?
Do LLC owners pay self-employment tax?
Sources & further reading
Disclaimer: Legal information, not legal advice. For advice about your specific situation, consult a licensed attorney or CPA in your state. See our full disclaimer.