Ohio is an attractive state for entrepreneurs looking to start a business thanks to its key Midwest location, well-developed infrastructure, and business-friendly legal environment. In 2023, almost 1 million small businesses called Ohio home. The state’s transportation network is an important asset and features major roads, railways, cargo-friendly airports, and a connection to the Atlantic Ocean through the Port of Cleveland. Ohio also has moderate personal income tax rates and no corporate income tax, opting instead for a commercial activity tax (CAT) based on gross receipts.

Though aspects of Ohio’s tax structure and location are a draw for businesses, the state has more limited access to venture capital compared with other states. Potential entrepreneurs should carefully consider their needs and circumstances when weighing the advantages and disadvantages of starting a business in Ohio.

Below, we’ll explain how to start a business in Ohio, highlight the advantages and disadvantages, and detail resources to help you through the process.

What’s in this article?

• What sets Ohio apart from other states for entrepreneurs?
  
• How to start a business in Ohio
  
• Advantages and disadvantages of starting a business in Ohio
  
• Resources for starting a business in Ohio
  

What sets Ohio apart from other states for entrepreneurs?

Here’s how Ohio differs from other states regarding starting a business:

• Key location: Ohio’s central location within the United States makes it a prime logistics and distribution hub. The state has a well-developed transportation infrastructure that includes roads, railways, and airports, providing easy access to major markets in the Midwest and beyond.

• Diverse industry base: Ohio’s economy includes a diverse mix of manufacturing, healthcare, technology, finance, and agriculture sectors. This diversity offers entrepreneurs a wide range of opportunities and reduces the risk that an economic downturn will affect any one sector.

• Business-friendly tax climate: Ohio has no corporate income tax but imposes a relatively low gross receipts tax instead. The state has a variety of tax incentives and credits to attract and support new businesses, particularly in manufacturing and technology sectors.

• Research and development environment: Ohio is home to several world-renowned research institutions and universities such as The Ohio State University and Case Western Reserve University. This strong research and development environment breeds innovation and provides opportunities for collaboration between businesses and academia.

• Startup scene: Ohio has a vibrant startup scene, particularly in cities such as Columbus and Cincinnati. These cities have incubators, accelerators, and coworking spaces to support early-stage startups and create a collaborative environment for entrepreneurs.

• Advanced manufacturing and Industry 4.0: Ohio promotes advanced manufacturing and Industry 4.0 initiatives. Entrepreneurs in this space can benefit from supportive policies, access to cutting-edge technology, and a growing network of manufacturers embracing digital transformation.

• Manufacturing heritage and supply chain network: Ohio has a long history in manufacturing, particularly in automotive and aerospace industries. This has led to a strong supply chain network, which provides a reliable source of materials and components for businesses in those sectors.

• Business community: Ohio has a strong network of business organisations, chambers of commerce, and economic development agencies with resources, mentorship, and networking opportunities for entrepreneurs. This supportive community can be invaluable for new businesses seeking guidance and connections.

How to start a business in Ohio

Here’s a step-by-step guide for starting a business in Ohio:

Choose a name

Choose a unique business name, and ensure it’s not being used by another business in Ohio by checking the Ohio Secretary of State’s business search tool. If you’re operating under a name that is different from your legal business name, you’ll need to register it with your county recorder’s office. Consider conducting a trademark search to avoid potential legal issues.

Choose a business structure

Consult with legal and financial advisors to choose the best business structure for your needs and goals. Choose among these structures:

• Sole proprietorship: This is the simplest business structure. Owners are personally liable for debts and obligations.

• Partnership: Partners share ownership of the business and are personally liable for debts and obligations.

• Limited liability company (LLC): LLCs offer personal liability protection and flexible management options.

• Corporation (S corp or C corp): Corporations provide the most liability protection but involve more complex formalities.

Register your business

Different business structures have different registration requirements and filing fees. You can pay filing fees online or by mail.

• Sole proprietorships and partnerships: These business structures are not required to register with the state but might need to register a “doing business as” (DBA) name.

• LLCs and corporations: These business structures must file formation documents with the Ohio Secretary of State’s Office.

Obtain an Employer Identification Number (EIN)

An EIN acts like a Social Security Number for your business and is required for tax purposes and opening a business bank account. Apply online through the IRS website.

Open a business bank account

A business bank account separates your personal and business finances for accounting and liability protection. Compare banks and their services to find the best fit for your business.

Obtain licences and permits

Depending on your industry and location, you might need to acquire various federal, state, and local licences and permits. For example, you’ll need a vendor’s licence if you sell taxable goods or services, and certain professions such as contractors, beauty therapists, and healthcare providers require specific licences to operate.

Research insurance and legal obligations

Before going into business, ensure you have the appropriate insurance and you fully understand your legal obligations.

• Insurance: Obtain appropriate insurance coverage to protect your business from liability, property damage, and other risks.

• Taxes: Register with the Ohio Department of Taxation, and understand your tax obligations.

• Local regulations: Check with your city or county for any additional local regulations or requirements.

Advantages and disadvantages of starting a business in Ohio

Ohio offers businesses a stable, affordable, and supportive environment. Its central location, diverse economy, and skilled workforce make it an attractive option for a variety of industries. Though access to venture capital might be limited in Ohio, the state’s focus on small-business support and workforce development programmes can be invaluable for entrepreneurs seeking to establish and grow their businesses.

Here are the key advantages and disadvantages of starting a business in Ohio:

Advantages

• Cost of living: Ohio has a substantially lower cost of living than coastal states such as California. This translates to lower operational costs, making it easier for businesses to establish themselves and grow.

• Central location: Ohio’s geographic location in the heart of the Midwest provides easy access to major markets and a well-developed transportation infrastructure including roads, railways, and airports. This makes it an ideal location for businesses involved in manufacturing, distribution, and logistics.

• Business environment: Ohio has a reputation for being business-friendly, with streamlined regulations, tax incentives, and programmes designed to support small businesses and startups.

• Economy: Though Ohio is known for its manufacturing heritage, its economy has diversified in recent years, with growing sectors in healthcare, technology, and renewable energy. This diversification offers a wide range of opportunities for businesses across various industries.

• Workforce: Ohio has a skilled workforce with a tradition of craftsmanship. The state is also home to numerous universities and technical schools, providing a steady pipeline of talent.

Disadvantages

• Limited access to venture capital: Compared with coastal hubs such as Silicon Valley, Ohio has a smaller pool of venture capital. This can make it challenging for startups seeking large investments to scale quickly.

• “Brain drain”: Ohio, among other Midwestern states, has faced a “brain drain,” with some young, educated professionals migrating to larger cities for better career opportunities.

• Limited diversity: Compared with states such as California, Ohio has a less diverse population. Though the state’s demographics are changing, it can be a factor for businesses seeking to attract a diverse workforce or cater to a wide range of customer demographics.

• Weather: Ohio experiences all four seasons, including harsh winters with snow and ice. This can sometimes disrupt business operations and increase transportation costs.

Resources for starting a business in Ohio

These resources can help you start your business in Ohio:

State government resources

• Ohio Secretary of State’s business site: This government website has a wealth of information on how to start and run a business in Ohio, including information on registration, licences, and taxes.

• Ohio Small Business Development Centers (SBDC): These centres provide free, confidential business advising, training, and resources for entrepreneurs at all stages.

• Ohio Minority Business Assistance Centers (MBAC): These centres help minority-owned businesses with services including certification, access to capital, and networking opportunities.

Local resources

• County economic development offices: Every county in Ohio has an economic development office with local resources, incentives, and assistance for businesses.

• Chambers of commerce: Local chambers of commerce have networking events, advocacy initiatives, and resources for businesses in their communities.

• Regional business incubators and accelerators: These organisations have mentorship, resources, and funding to help startups scale.

Additional resources

• JumpStart Inc.: This non-profit venture development organisation focuses on supporting entrepreneurs in Northeast Ohio.

• Rev1 Ventures: This venture capital fund and startup studio invests in and supports high-growth tech businesses in Ohio.

• The Brandery: This startup accelerator focuses on customer-facing brands based in Cincinnati.

Online resources

• Ohio business resource connection: This directory has resources for all Ohio businesses, with services for businesses owned by women, minorities, veterans, and people with disabilities.

• Ohio Business Magazine: This magazine provides news, information, and insights for Ohio businesses.

• OhioX: This tech-focused non-profit connects and supports startups and tech businesses in Ohio.