One of the most challenging downsides of our current technologically advanced society is the quantity of numbers and passwords we are required to use. Most of us have a Social Security number, and that number is different than our phone’s passcode, which is different from our ATM code and which is also different from our Netflix login.
Of course, businesses typically use several other numbers and passcodes. This column explains the most common business numbers used in Ohio.
If someone establishes an LLC to operate or own a business, that LLC will be created by filing Articles of Organization (or Articles for short) with the Ohio Secretary of State. As a part of that filing, the Secretary of State assigns a “document number” to identify the actual, filed Articles. The Secretary of State’s document number is only used as a tool to find filed documents.
Separately, the Secretary of State assigns each entity a unique “charter number.” The charter number is used to identify the entity if the entity’s organization is ever changed. For instance, if I change the name of an LLC, the documents changing the name will need to reference the LLC’s charter number.
Separate from (and usually following) an entity’s establishment, the business can get an employer/tax identification number (EIN). An EIN is to a business what a Social Security number is to a living person. An EIN is nine digits long, like a Social Security number but is hyphenated only once, after the first two digits. EINs are used in filing tax returns with state and federal governments. EINs can be applied for and can usually be assigned via the internet directly through the IRS’s website. Getting EINs is free, despite many for-profit websites that act as an intermediary and charge a fee.
Ohio Department of Taxation uses EINs for income tax purposes, instead of charter numbers or document numbers assigned by the Secretary of State.
Any business that sells goods or services that are subject to sales tax must also file an annual application for a vendor’s license, along with an application fee of $25. Vendor’s licenses are good for one year. Vendor’s licenses establish the business’s “sales tax” account with the Ohio Department of Taxation so the business can remit its sales tax revenue to the state in an orderly fashion, usually monthly. There are different types of vendor’s licenses in Ohio, and some can be secured from a local, county auditor’s office, while others are secured online from the Ohio Department of Taxation.
The vendor’s license number is most frequently used when completing Sales Tax Exemption Certificates (exemption certificates). An exemption certificate is a separate form completed by a business that is purchasing goods or services that will be resold, such that the purchased goods will be able to be purchased without paying sales tax.
Vendor’s licenses and exemption certificates operate together in Ohio to facilitate what other states often call “wholesale licenses.”
Charter numbers, EINs, and vendor license numbers each serve different purposes and are not interchangeable.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.