Ohio is one of the easiest states for employers because it has so few rules on payroll, time off, and breaks. However, its income taxes are more complex because it includes school district income taxes. Below, we cover the basics of doing payroll in Ohio.
Payroll software that handles tax filing can make things easier and ensure you stay compliant. We recommend Gusto. It pays employees by check or direct deposit and tracks payroll and tax laws for all 50 states. Learn more about Gusto and see if it’s right for you.
Running Payroll in Ohio: Step-by-Step Instructions
Step 1: Set up your business as an employer. For the federal level, you need your employer identification number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS).
Step 2: Register with the state of Ohio. You need to register with the Ohio Business Gateway online, at which time you’ll also set up your account for filing and paying withholdings. Alternatively, you can fill out a paper form, but it takes weeks to process. You must also register with the Department of Job and Family Services, and with the Employer Resource Information Center (ERIC) to pay State Unemployment Tax Act (SUTA) taxes.
Step 3: Set up your payroll. Ohio has few laws concerning paid time off and breaks, but does have overtime rules. This step isn’t where you actually start running payroll but rather begin your process of setting it up. There are many ways to calculate payroll, and it’s up to you to decide which is best for your business. You can use payroll software, a calculator, or even Excel.
Step 4: Collect employee payroll forms. This is easiest to do during onboarding. Forms include W-4, I-9, and Direct Deposit information. For Ohio, you need the IT 4 (employee withholding exemption certificate).
Step 6: Calculate payroll and pay employees. Now that you’ve set up payroll in Step 3 you can calculate payroll and pay your employees by either using software, your own excel spreadsheet system, or a payroll calculator.
Step 7: File payroll taxes with the federal and Ohio state governments. Follow the IRS instructions for federal taxes, including unemployment.
- Ohio income taxes: Withholdings are filed with the Ohio IT 501. You need to pay online through the Ohio Business Gateway or using electronic funds transfer through the Ohio Treasurer of State. You only need to file for the quarters in which you withheld taxes. How often you must file depends on the combined amount of income and school district taxes withheld in a 12-month period ending June 30.
Combined withholdings during the look-back period
File and Pay By
Last day of the month following the end of the quarter
Between $2,000 and $84,000
15th of the following month
Partial-weekly (Sunday–Tuesday, Wednesday–Friday, depending on the day of the week you issue payroll)
First banking day after payroll is issued
- SUTA: For any quarter that you don’t have employees and paid no SUTA, you can file by phone at 1-866-44-UC-TAX. Otherwise, it’s easiest to download the Quarterly Wage Reporting Tool from the ERIC website, fill it out offline, and then upload it. Payments are due by the following dates:
For Wages Paid During
Calendar Quarter Ends
Must be Filed and Paid By
Jan, Feb, Mar
Apr, May, Jun
Jul, Aug, Sep
Oct, Nov, Dec
If the due date for a report or tax payment falls Saturday or Sunday, reports and payments are considered on time if they are received on or before the following business day.
Step 8. Document and store your payroll records. Ohio requires you to keep records on employees for at least four years. Learn more in our article on retaining payroll records.
Step 9. Do year-end payroll tax reports. Send the federal Forms W-2 (for employees) and 1099 (for contractors). You also need to submit the IT3 Transmittal of Wage and Tax Statements, and, of course, any reconciliation of taxes like the IT 942.
Learn more about doing payroll yourself in our guide on how to do payroll. It even has a free checklist you can download to make sure you don’t miss any steps.
Ohio Payroll Laws, Taxes, and Regulations
As with any state, you should follow the federal law for income taxes, Social Security , Medicare, and Federal Unemployment Tax Act (FUTA) taxes. Please note: You’ll need to withhold 6.2% of each employee’s earning for Social Security and 1.45% for Medicare; you’ll also pay a matching amount. Income taxes vary and are paid by the employee. FUTA is your responsibility. Learn more in our article on taxes, FICA, and FUTA. Below are the Ohio-specific considerations.
Ohio taxes are a little more complex than in many states. In addition to the state income tax, there are school district taxes you must calculate withholdings for. In addition, there are reciprocity agreements that affect workers that live in neighboring states.
State Income Taxes
Ohio charges income tax rates from 0% to 4.79%, with charges starting with income of over $22,151. The Ohio IT 4 determines the number of exemptions. Ohio has several withholding tables depending on whether you want to hold by percentage, weekly, biweekly, etc. You can find these on the Ohio Department of Taxation website.
Ohio conforms to federal law concerning compensation and qualifying employees. The following employee types are exempt:
- Those exempt under federal law, such as certain agricultural and domestic workers
- Individuals earning less than $300 in a calendar quarter
- Newspaper or shopping news delivery persons who are under 18
- Civilian spouses of military members who have the same state of residency, which is not Ohio
Ohio has a complex schedule for when withholdings are due. There are also fines for failure to file of $50 or 5% per month, and 10% of the delinquent payment per month for failure to pay. Withholdings withheld but not remitted incur a penalty of 50% of the delinquent payment plus double the interest charged.
Ohio has reciprocity laws with Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. If you have employees who live there but work in Ohio, they will pay income taxes for their own state.
Local Income Taxes
Some local school districts have income taxes. If an employee lives in such an area, you must withhold the income taxes for that school district as well. You can find the school district tax rates on the Ohio Department of Taxation website. You can find the 2021 rates on this document, but they change from year to year.
In the News: Ohio is launching a new unemployment insurance system, SOURCE (State of Ohio Unemployment Resource for Claimants and Employers). It gives employers and employees more autonomy in managing taxes and benefits and getting UI information. Employers are expected to start using it in 2021. Learn more on the Ohio Department of Job and Family Services Website.
Ohio charges SUTA based on a taxable wage base of $9,000. It defines wages as “all money, the value of meals and lodging, or other goods and services provided to an employee as payment for personal services.”
SUTA rates run from 0.3% to 9.3% for experienced employers. New employers are charged 2.7% unless they are in construction, which is 5.8%. The state sends you your contribution rates for the following calendar year by Dec. 1.
You must pay SUTA in the following circumstances:
- You employed one or more people in Ohio on any one day within each of the 20 or more calendar weeks of any calendar year
- Your annual gross wage payroll equals or exceeds $1,500 in a quarter
- You employed agricultural workers and paid $20,000 or more in cash during any quarter of the current or previous calendar year
- You are a nonprofit organization exempt from income tax under federal law but employ more than four people at any one day within each of the 20 or more calendar weeks of any calendar year
- You employed domestic workers and paid $1,000 or more in cash for domestic services in any quarter of the current or preceding calendar year
Ultimately, if you have an employer-employee relationship with a person, you need to pay SUTA on them.
Did you Know?:
When you pay SUTA, you may qualify for up to a 5.4% discount on your federal unemployment insurance taxes.
Workers’ Compensation Insurance
You must have workers’ compensation insurance if you have at least one employee. Ohio provides workers’ compensation insurance through the Bureau of Workers’ Compensation. There are multiple plans depending on the type of business and who you are covering, from mine operators to emergency service volunteers. Rates are set by an industrywide classification and the employer’s work experience. It costs $120 to apply, after which, your employees are covered. You may also elect to self-insure.
To learn more about Ohio’s workers’ comp requirements, providers, and costs, check out our guide on Ohio’s workers’ compensation.
Minimum Wage Laws in Ohio
If your company grosses over $323,000 a year, you need to pay Ohio’s minimum wage. If you gross less than that, you may pay employees at the federal minimum wage.
Ohio’s minimum wage is $8.80 per hour. Tipped employees must be paid $4.40 per hour plus tips to at least the minimum wage. In addition, employees under 20 can be paid a training wage of $4.25 per hour for the first 90 days of employment, and full-time high school or college students may be paid 85% of minimum wage for up to 20 hours’ work per week at certain employers, such as work-study.
The following exemptions apply:
- Certain agricultural employees
- Outside salesperson
- Family members
- Certain employees of motor carrier companies
- Baseball players in minor leagues under certain conditions
- Camp employees under certain conditions
Ohio Overtime Regulations
Overtime rules apply to employers grossing over $150,000 in a year. You need to pay employees at least time-and-a-half overtime pay if they work more than 40 hours in a workweek—and that’s per federal and state law. Exceptions include:
- Agricultural workers
- Executive, administrative, and professional employees who earn over $107,432
- Some developmentally disabled persons, where full wages might impact their ability to be hired
- Babysitters or live-in companions to a sick, convalescing, or elderly person
- Camp employees under certain conditions
- Family members
- Newspaper delivery persons
- Outside salespersons
- Certain motor vehicle operators
Need help calculating overtime? Check out our article on determining overtime for hourly and salaried employees.
Different Ways to Pay Employees
Ohio does not have any laws concerning the way you pay employees. Keep in mind, however, that 7.1 million people in the US don’t have a bank account, which means direct deposit does not work for them. In these cases, checks or pay cards are good options. Some payroll systems even provide special accounts, like Gusto’s Gusto Wallet. Explore the options in our article on paying employees.
Pay Stub Laws
Ohio does not have any pay stub laws, but you must keep payroll records for each employee for four years and include
- Name, address, and occupation
- Rate of pay
- Amount paid each pay period
- Hours worked each day and workweek
If your software does not create pay stubs, you can download one of our free pay stub templates.
Minimum Pay Frequency
You must pay wages at least twice a month. You can pay on a set schedule, like the first and 15th, on an every-two-weeks schedule, or even weekly or daily. So, for example, all hours worked from the first to the 15th of month are paid on the first of the following month. All hours worked from the 16th to the end of the month would be paid by the 15th of the following month. There may be some exceptions according to the standard of the trade or profession, but Section 4113.5 of the Ohio State Code does not specify specific exemptions.
Paycheck Deduction Rules
Ohio does not have any deduction rules, except that deductions cannot take an employee below minimum wage. However, it’s good practice when hiring employees to inform them what deductions you take and to note them in the employee handbook.
Final Paycheck Laws
If an employee is fired or leaves, you need to pay them the final paycheck on the next scheduled payday or within 15 days, whichever is earlier. You cannot withhold the paycheck for any reason, but Ohio makes no rules on whether you need to compensate for untaken paid time off (PTO). Be sure that’s spelled out in your company policy.
Accrued Paid Time Off
Ohio has no laws concerning holiday, vacation, or sick time. Federal law does not require you to give paid time off for vacations, but the Family Medical Leave Act requires you to provide up to 12 weeks’ unpaid sick leave for personal illness or caring for a sick member of the employee’s immediate family. Learn more from the Department of Labor sick leave breakdown..
Ohio HR Laws That Affect Payroll
Ohio HR laws are few except when it comes to minors. When hiring minors, you need to be concerned with breaks as well as what jobs and hours they work.
Ohio New Hire Reporting
You must report new hires to the Ohio Department of Job and Family Services within 20 days of hire. Do this through the New Hire Reporting Center online.
Lunch and Other Break Time Requirements
Ohio does not have any laws concerning breaks or meal periods for adult employees, nor are there federal mandates for meal breaks. Be sure to outline any company policies in your handbook and share them with employees when hiring.
Minors need a 30-minute rest period every five hours. You must keep careful records of start, stop, and rest period times. These records need to be kept for two years.
The Ohio child labor laws cover minors under 18. Minors 14–17 require a work permit, and employers should require all minors to have employment certificates.
Minors 16 and 17 who are required to attend school cannot work before 7 a.m. on a school day or 6 a.m. otherwise. They cannot work after 11 p.m. on a night preceding a school day.
Minors under 16 cannot work during school hours except where permitted by Ohio Revised Code Chapter 4109. They cannot work between 7 a.m. and 7 p.m. except between June 1 and September 1 or when they have a school break of more than five days. In those cases, they may work until 9 p.m. They cannot work more than three hours a day during a school day and 18 hours a week in a school week. However, when school is not in session, they can work eight hours a day and 40 hours a week. They cannot work in the following areas:
- Manufacturing, mining, or processing
- Work in freezers or meat coolers or in meat preparation except for wrapping and packaging meat for sale
- Transportation, loading of trucks
- Warehouse or storage work except clerical
- Construction or repair
- Boiler or engine rooms
- Outside window washing that requires ladders or scaffolding
- Cooking or baking under certain conditions
- Vehicle repair that involves pits, racks, or lifting apparatuses
- Door-to-door sales except under specific conditions
The list is more general for those 16 and 17 but mostly includes prohibitions against power-driven machinery, from circular saws to bakery machines. Also prohibited are jobs including chemical manufacturing, explosives, and logging.
For the most part, Ohio requires you to file payroll and withholding forms electronically through the Ohio Business Gateway. You’ll pay electronically as well. While you can find these forms online, you need an exemption from the state if you want to file by mail.
Ohio State IT 4 Form
Ohio’s withholding exemption form is the IT 4. It must be filled out within 10 days of hiring an employee or if the number of exemptions changes. Employees also need to fill out a new one if they change school districts.
Other Ohio State Payroll and Tax Forms
- IT 1 Application for Registration as an Ohio Withholding Agent: While the paper copy exists, it can take up to six weeks to process. It’s best to go to the Ohio Business Gateway and apply there. At the same time, you’ll set up your account to file and pay electronically.
- IT 501 Employer’s Payment of Ohio Tax Withheld: For filing and paying quarterly taxes. Unless you filed for an exemption, you must file this electronically according to the schedule outlined in step 7 above.
- IT 941 and 942 Income Tax Withheld: These must be filed electronically. Use the IT 942 if you are required to remit quarterly or monthly, and the IT 942 if you must pay partial-weekly.
- SD 501 Employer’s Payment of School District Income Tax Withheld: Must be filed electronically with your withholdings if you file quarterly or monthly. If you file partial-weekly, then the 942 covers school district withholdings.
- WT 8655 Withholding Tax Payroll Service Company Authorization and Release: To allow a payroll service to file and pay your tax withholdings.
Federal Payroll Forms
- W-4 Form: To help employers calculate taxes to withhold from employee paychecks
- W-2 Form: Reporting total annual wages earned (one per employee)
- W-3 Form: Reports total wages and taxes for all employees
- Form 940: Reports and calculate unemployment taxes due to the IRS
- Form 941: Filing quarterly income and FICA taxes withheld from paychecks
- Form 944: Reporting annual income and FICA taxes withheld from paychecks
- 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work
For a more detailed discussion of federal forms, check out our guide on federal payroll forms you may need.
Ohio Payroll Tax Resources and Sources
- Ohio Minimum Wage Poster: Information you can download and post for employees
- Ohio Department of Taxation Website: Links for forms, tax tables, FAQs, and more concerning income and school district taxes
- Ohio Bureau of Workers’ Compensation: For learning more about workers’ comp and getting a policy
- Ohio Laws and Administrative Rules: Searchable database of the laws, with the exact wordings
- Ohio Labor Law FAQs: Quick answers to employee questions about wages and pay
- Ohio Department of Job and Family Services: For information about SUTA, new hires, and more
- Employer’s guide to Electronic Quarterly Unemployment Insurance Tax Filing: Instructions for reporting and paying SUTA
- Ohio State Minor Labor Laws: Employer flyer on labor laws for people under 18
Ohio does not have rules mandating breaks, time off, or pay deductions. It has a more general definition of employer/employee than other states. In many cases, you can follow federal law. However, the income taxes must be paid according to a schedule that’s different from many states, and Ohio requires you to withhold school district taxes. Be sure you understand your obligations so that you don’t incur fines.
To help you file accurately and on time, consider using a payroll software like Gusto. It pays employees with direct deposit for free and offers health insurance benefits. The company will even foot the bill if your payroll is wrong and you end up penalized by a tax agency. Sign up for its 30-day free trial.