Ohio Business Credit Application

Please note that as of 2016, taxable business income is taxed at a flat rate of 3%. The tax brackets have been indexed for inflation per Ohio Revised Code section 5747.02. Taxpayers with $22,150 or less of income are not subject to income tax for 2020.

Small businesses pay an average of 19.8 percent in taxes depending on the type of small business. Small businesses with one owner pay a 13.3 percent tax rate on average and ones with more than one owner pay an average of 23.6 percent.

LLCs give business owners significantly greater federal income tax flexibility than a sole proprietorship, partnership and other popular forms of business organization. Make sure you have a financial plan in place for your small business.

Like a sole proprietorship, a single-member LLC is taxed as a disregarded entity by default. Because the government ignores disregarded entities, they undergo "pass-through taxation." This means all profits or losses from the business pass through the business directly to you, the business owner.

By utilizing the Ohio BID, Ohio taxpayers filing jointly can deduct up to $250,0002 of business income from their Federal Adjusted Gross Income (AGI) when calculating their Ohio taxable income. The excess amount of business income left after the BID is taxed at the 3% flat rate.

Ohio LLCs are not taxable entities as such, but Ohio does impose filing, withholding, and tax remission obligations on them. General rule is LLCs must withhold, and pay to the Ohio Treasurer, an amount equal to 5% of the distributive share of income, gain, expense or loss allocable to individuals.

Currently, six states Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming do not have a corporate income tax.Ohio has a commercial activity tax (CAT) that applies to nearly every Ohio business and is based on gross receipts.