This guide summarizes how small business taxes are structured in Ohio and what that means for your bookkeeping. It links to official sources from the Ohio Department of Taxation and other state agencies; rates, thresholds and due dates change, so always confirm current figures there before filing.

Commercial Activity Tax

Ohio does not have a traditional corporate income tax for most businesses. Instead, the Ohio Department of Taxation administers the Commercial Activity Tax (CAT), a tax on gross receipts from business activity in Ohio above an annual exclusion amount. The exclusion has been raised in recent years, so smaller businesses should confirm whether they still need to register and file.

Sales tax and vendor's licenses

Ohio's sales tax combines a state rate with county permissive and transit rates. Businesses selling from a fixed location in Ohio obtain a vendor's license for each location; transient and out-of-state sellers have their own licenses.

Three layers of income tax withholding

Ohio employers may withhold three income taxes: state income tax, school district income tax for employees living in districts that levy one, and municipal income tax for the city where the employee works and sometimes where they live. Many municipalities use a central collection agency, while others collect directly, so payroll setup needs each employee's addresses.

Workers' compensation through the state

Ohio is a monopolistic workers' compensation state: most employers must obtain coverage through the Ohio Bureau of Workers' Compensation rather than private insurers. Unemployment tax is administered by the Department of Job and Family Services.

Bookkeeping for Ohio filings

  • Track Ohio gross receipts by quarter to monitor the Commercial Activity Tax exclusion
  • Store each employee's school district and municipality, because Ohio payroll can require three income tax withholdings
  • Record workers' compensation premiums paid to the state fund in their own expense account

Official Ohio sources

We support Ohio businesses remotely with bookkeeping, payroll and tax services. See all state guides or the small business tax glossary.