Starting a Contracting Business in Ohio: LLC, Taxes, and Registration

The Setup Sequence Matters

Jumping straight to pulling permits is the most common mistake new Ohio contractors make. Building departments won't issue permits until they've verified your business entity, workers' comp, and local registration — and each step in the setup chain feeds into the next. Here's the order that avoids backtracking.

Step 1: Form Your Business Entity

Register your LLC or corporation with the Ohio Secretary of State by filing Form 533A (Articles of Organization for LLCs) through the Ohio Business Central portal. The filing fee is $99.

Ohio has a real advantage here: LLCs don't file annual reports or pay recurring state-level maintenance fees. As long as you maintain a designated statutory agent with a physical Ohio address, your entity stays in good standing without annual filings.

Choose your entity name carefully. Municipal building departments require exact name matches across your Secretary of State filing, surety bonds, insurance certificates, and registration applications. A name mismatch on any document causes processing delays.

Step 2: Get Your Federal EIN

Once your entity is approved, obtain an Employer Identification Number from the IRS through IRS.gov. It's free and usually issued immediately for online applications. You'll need the EIN for tax filings, opening a business bank account, hiring employees, and completing local registration applications.

Step 3: Enroll in BWC Workers' Compensation

Ohio is a monopolistic workers' compensation state. All workers' comp insurance must be purchased directly from the Ohio Bureau of Workers' Compensation using Form U-3. Private workers' comp policies do not satisfy Ohio's statutory coverage requirement — even if your insurance agent sells you one, it won't satisfy a municipal registration requirement.

Coverage is mandatory for any business with one or more employees. Corporate officers are classified as statutory employees and must be covered. Sole proprietors, partners, and single-member LLCs with no employees can obtain coverage voluntarily, but some municipal building departments require BWC proof regardless of employee count.

The minimum opening deposit is $120, with ongoing premiums calculated based on your NCCI class codes and payroll volume. Construction trades generally carry higher rates than office-based businesses.

Step 4: Tax Registrations

Open a business tax account with the Ohio Department of Taxation. This covers several obligations:

Vendor's license: Required for any business making retail sales in Ohio. The fee is $50 (raised from $25 on April 9, 2025, under House Bill 366). Contractors who sell materials as part of their services may need this.

Commercial Activity Tax (CAT): Assessed at 0.26% on taxable Ohio gross receipts. The exclusion threshold is $6 million for tax year 2025 forward — contractors below this threshold don't owe CAT but must monitor receipts and register within 30 days of exceeding it.

Municipal income tax: Most Ohio cities impose their own income tax on businesses operating within city limits. The two main administrators are RITA (Regional Income Tax Agency) and CCA (Central Collection Agency). You'll register with whichever agency covers the cities where you work.

Step 5: Get Licensed or Registered

Now you're ready for the construction-specific credentials:

• OCILB specialty trade license — if you perform commercial electrical, HVAC, hydronics, plumbing, or refrigeration work
• Municipal general contractor registration — in every city where you plan to pull building permits

Each municipality has its own application, bond form, fee schedule, and insurance requirements. No state-level GC license exists in Ohio, so local registration is the only path.

The Complete Roadmap

The Ohio General Contractor License Guide walks through every step of this sequence — from entity formation through local registration — with the specific forms, fee amounts, and compliance requirements for each major Ohio municipality. It's built for contractors who want to get set up correctly the first time instead of discovering missing requirements at the permit counter.

See more Ohio guides →