Ohio’s original LLC Act was adopted by the Ohio General Assembly in 1994, providing a more flexible option for forming companies in the state. The LLC appeals to business owners of all shapes and sizes as it accommodates a variety of ownership structures while at the same time, protecting the personal assets of its owners and providing a tax efficient method of organization.
Since it became an option more than 25 years ago, the number of LLCs has ballooned in Ohio. In fact, 73.5 percent of the state’s active business entities are now LLCs. And in 2019 alone, more than 87,500 new LLCs formed in Ohio – that is 88 percent of all the new business entities filed for that year (the remainder being corporations and partnerships). Despite growing popularity of LLCs among business owners, Ohio law has not kept pace with the significant evolutions in business and investing. Though minor tweaks have been made over the years, no major revision has been undertaken – until now.
“As Limited Liability Corporations are a critical component to Ohio’s overall economy, it is important that we do all we can to ensure that these businesses have a legal framework that is efficient, transparent and makes common sense,” Roegner said.
“LLCs are incredibly important to Ohio’s economy, and we want to make sure that Ohio remains a place where they can continue to thrive and operate,” Manning said.
In drafting the legislation, Senators Roegner and Manning have been working closely with the Ohio State Bar Association’s Corporation Law Committee. In consultation with the Ohio Secretary of State’s office and the OSBA Estate Planning, Trust and Probate Law Section, these dedicated practitioners have carefully and systematically combined the best recommendations of corporate attorneys around the nation with the more familiar and unique aspects of Ohio’s existing LLC Act. The resulting Senate Bill 276 will establish Ohio’s LLC statute as one of the most modern in the nation, streamlining administration for both Ohio small businesses and the state.
The bill would also make Ohio one of only 16 states in the nation that endorse the formation of “series LLCs.” Series LLCs enable multiple limited liability companies, each with its own ownership, bank accounts and debt, to operate under one umbrella company, reducing unnecessary paperwork and administrative costs. Depending on the structure and goals of the company, Series LLCs can help small businesses better manage their risk and liability. Of course, companies that don’t require the level of sophistication that a series LLC affords still stand to benefit from the greater consistency and clarity Senate Bill 276 would bring.