The Ohio single-member LLC, explained

What is a single-member LLC in Ohio?

A single-member LLC is a limited liability company with exactly one member. Ohio's LLC statute, Chapter 1706 of the Revised Code, does not create a separate category for it. A one-owner LLC is formed the same way, files the same articles, and has the same status on the state record as an LLC with ten owners.

The statute does recognize one-owner companies in the places that matter. The definition of an operating agreement includes "any written declaration of the sole member" (ORC 1706.01(R)), and an operating agreement is not unenforceable just because only one person is a party to it (ORC 1706.081(D)). Admitting a new member with the sole member's consent is also written into the default rules (ORC 1706.27(B)(3)).

The owner can be a person or another business. A corporation or another LLC can be the sole member, which is one way a company can hold a subsidiary. The rest of this guide focuses on an individual owner. If you are still deciding whether to form an LLC at all, our Ohio LLC vs. sole proprietorship comparison covers that choice.

Forming an Ohio LLC as the only owner

The filing steps are the same as for any LLC, and our guide on how to start an LLC in Ohio walks through them. A few points are specific to doing it alone:

• You can be the organizer, the member, and the signer. Form 610 needs one signature.
• If you file as organizer on your own behalf, you are admitted as the member when the LLC is formed (ORC 1706.27(A)).
• The articles do not list members. The public record will show the LLC's name, its statutory agent, and the person who signed, but not an ownership table.
• The state fee is the same $99 whether the LLC has one member or many.

You also choose a statutory agent. A one-owner LLC can name its owner if the owner is an Ohio resident, in which case the owner's home address goes on the record. Our guide on whether you can be your own registered agent in Ohio covers that trade-off.

How the IRS taxes a single-member LLC

By default, the IRS treats a single-member LLC as a disregarded entity for federal income tax. The LLC does not file its own income tax return. Its income and expenses go on the owner's return.

An individual owner pays self-employment tax on the LLC's net earnings, the same as a sole proprietor, according to the IRS.

Disregarded is not the whole story

The IRS treats the same LLC as a separate entity for employment taxes and certain excise taxes. If the LLC has employees, it reports and pays employment taxes under its own name and EIN, not the owner's.

Choosing a different classification

A single-member LLC can elect to be taxed as a corporation by filing Form 8832. The IRS generally does not let a classification election take effect more than 75 days before it is filed or more than 12 months after. Many owners who change classification do it to elect S corporation status. Our S-corp election service files that, and your accountant can tell you whether the numbers favor it. For Ohio and city taxes on an LLC, see our guide to Ohio LLC taxes.

Does an Ohio single-member LLC need an EIN?

Not always. The IRS rules for a single-member LLC are:

• Required if the LLC has employees.
• Required if the LLC must file certain excise tax returns.
• Not required for federal tax purposes if the LLC has neither. It can use the owner's name and taxpayer identification number instead.

In practice, most owners get one anyway. Banks commonly ask for an EIN to open a business account, and the IRS itself notes that most new single-member LLCs will need one. Having an EIN also keeps your Social Security number off documents you hand to customers and vendors.

Which number goes where

This is where single-member LLCs confuse people. Even with an EIN, a disregarded LLC owned by an individual reports income under the owner. The IRS says the Form W-9 from such an LLC should give the owner's SSN or EIN, not the LLC's EIN. The LLC's own EIN is used for its employment and excise tax filings, and often for bank and state accounts.

When the EIN changes

A name change or a move does not require a new EIN, and neither does electing to be taxed as a corporation or S corporation. A change in ownership or structure generally does, according to the IRS. Adding a second member is a change in structure, so talk to your accountant before you bring anyone in. Our EIN filing service handles the application and puts the IRS letter in your portal.

Liability protection for a one-owner Ohio LLC

Ohio law is direct about what membership alone does. Under ORC 1706.26, a member is not personally liable for the LLC's debts and obligations, whether they arise in contract, tort, or otherwise, solely because the person is a member. The same section adds that failing to observe formalities in running the company is not a factor in, or a ground for, imposing personal liability on the members.

That is a strong statute for a one-person company, which may never hold a meeting. It does not mean an owner can never be reached. Keep these limits in mind:

• A personal guarantee is your own promise. Leases, loans, and supplier accounts often require one from a small company's owner.
• Your own conduct can create your own liability, separate from the company's. Whether a claim reaches you personally is a question for an attorney.
• Mixing money, such as paying household bills from the business account, makes it harder to show where the company ends and you begin.
• Insurance, not the LLC, is what actually pays a covered claim.

Keep a separate business bank account, sign contracts in the LLC's name with your title, and keep the company's records apart from your own. Those habits are cheap and they make the separation easy to show.

The operating agreement for a single-member LLC

A sole member's operating agreement must be written, because the statute defines it as a "written declaration of the sole member" (ORC 1706.01(R)). It is enforceable even though only one person signs it (ORC 1706.081(D)), and you can sign it before the LLC is formed, with its terms taking effect on formation (ORC 1706.081(C)).

The multi-member issues of splits and votes mostly disappear. What remains:

• Who can sign for the company, so banks and counterparties have something to rely on.
• Whether there is a manager. Under ORC 1706.01(O), a manager is any person designated by the company or its members who agrees to serve, so an owner can appoint a trusted person to run operations.
• Who takes over if you die or become incapacitated, and how quickly.
• What happens to the membership interest on your death, coordinated with your estate plan.
• How a new member would be admitted, if you ever bring one in.

The rules for writing and amending an agreement, and the default terms that apply where it is silent, are covered in our guide to the Ohio LLC operating agreement.

Paperwork habits that keep a one-owner LLC separate from you

When one person is the whole company, it is easy to act as yourself without noticing. These habits cost little and make the LLC's separate existence plain to anyone who looks:

• Sign as the company. Use the LLC's exact legal name, then "By:" your name and title, such as Member or Manager. A signature with only your name can read as a personal promise.
• Use the legal name on invoices, quotes, and contracts. If you advertise under another name, register it as a trade name and still identify the LLC in contracts.
• Pay yourself by transfer from the business account, recorded as a draw or wages as your accountant advises, rather than by paying personal bills directly.
• If you lend the company money, write it down: amount, date, and repayment terms. If you put money in as capital instead, record that as a contribution so the two are never confused later.
• Keep one folder for the company: the filed articles, the state's receipt, the IRS EIN letter, your signed declaration, and every later filing.

A once-a-year check

Ohio LLCs file no annual report, so nothing from the state forces a yearly review. Pick a date and check three things: that the statutory agent and address on the Secretary of State's record are still right, that your declaration still names the successor you want, and that your insurance still fits what the business does. For a solo owner, ten minutes once a year catches most problems before they become expensive.

What happens to an Ohio single-member LLC when the owner dies

This is the single most important reason a one-owner LLC needs a written declaration. Here is how Chapter 1706 handles it when nothing is written down:

• An individual member is dissociated on death, on the appointment of a guardian or general conservator, or on a court finding that the member cannot perform as a member (ORC 1706.411(E)).
• The deceased member's personal representative may exercise the rights of a current member under ORC 1706.33 for purposes of settling the estate (ORC 1706.332).
• The LLC dissolves once 90 consecutive days pass after the last remaining member dissociates (ORC 1706.47(D)).
• Dissolution can be avoided if, within those 90 days, the holders of the last member's interest approve a designee who accepts, with admission effective as of the dissociation date (ORC 1706.27(B)(4)), or if the operating agreement provides for a substitute member to be admitted before the period ends.

Ninety days is not long when a family is also dealing with a funeral and probate. A declaration that names the successor member, or a designee and an alternate, lets the business keep operating without a race against the clock. An estate planning attorney can align it with your will or trust.

Statutory agent, records, and adding a member later

Every Ohio LLC, including a one-owner company, must keep a statutory agent on record (ORC 1706.09). For a solo owner, this is often the first thing to slip. If you are your own agent and you travel, work on site all day, or move, a process server may not find you, and an address change has to be filed on Form 521 with a $25 state fee.

Our Ohio statutory agent service is $49 per business per year. Documents are scanned to your portal the same business day, and a lawsuit or subpoena triggers a notice, then a phone call if you do not acknowledge it. Since a one-owner company has no partner to catch a missed notice, that escalation matters.

When the LLC grows

Adding a member does not require a state filing, because the articles do not list members. It does require the sole member's consent under ORC 1706.27(B)(3), a new or amended operating agreement, and a tax conversation: a domestic LLC with two or more members is classified as a partnership by default for federal income tax, which changes how it files. Talk to your accountant and attorney before the new member's money comes in.