Key figures
Ohio payables
2026, with sources
- W-2/1099 upload
- Due Jan 31Statements reporting Ohio withholding go through OH|TAX eServices; paper IT 3 not needed when uploaded.
- Use tax on untaxed purchases
- 5.75% + countyState rate on taxable goods and services bought without Ohio tax, plus the county rate.
- Business-use SaaS bought
- TaxableElectronic information services and data processing bought for use in business are taxable.
Use tax lands on software, too
Ohio is one of the states where the software a startup buys is taxable. Ohio’s sales tax reaches electronic information services, automatic data processing and computer services provided for use in a business, so most B2B SaaS invoices to an Ohio company are taxable. Large vendors usually charge it; small ones often don’t, and then the buyer owes use tax at the state rate of 5.75% plus the county rate.
For a company with an Ohio office, that makes accounts payable a tax review: a month’s untaxed software, equipment bought from out-of-state sellers and taxable services should be accrued as use tax and paid on the use tax return.
1099s and Ohio
Ohio wants information statements that show Ohio withholding uploaded through OH|TAX eServices by January 31 (February 2 for tax year 2025, because the 31st fell on a weekend), and the amounts must tie to the IT 941 and SD 141 reconciliations. Ohio does not require nonresident contractor withholding of the kind some states impose, so most startups paying contractors have no Ohio 1099 filing unless they withheld Ohio tax.
Uncashed checks and the B2B question
Uncashed vendor checks and unapplied credits are unclaimed funds in Ohio, reported each November 1. Ohio’s law exempts certain business-to-business balances arising from invoices, which removes much of a small company’s vendor exposure, but payroll checks of $50 or more and refunds owed to individual customers still need the owner notice and the report.
A company that writes a $300 refund check to a former customer in March and sees it uncashed at year end should keep it on the books, not write it back to income — Ohio treats it as the customer’s money.
The federal baseline
This page covers what Ohio adds. The federal rules underneath it apply here too.
Common questions
Do we send our 1099-NECs to Ohio?
Ohio’s W-2/1099 upload through OH|TAX eServices is for statements that report Ohio income tax withheld, and the reconciliations must tie to those statements. A startup that pays contractors without Ohio withholding reports them federally.
Do we owe Ohio tax on the software we buy?
Often, yes. Ohio taxes automatic data processing, computer services and electronic information services when they are bought for use in a business. If a SaaS vendor doesn’t charge Ohio tax, the company owes use tax on it, at the state rate plus the county rate where it is used.
Payables next door
- INIndiana payablesIndiana reconciles W-2s and 1099s with Indiana withholding on the WH-3 by January 31 and charges 7% use tax on untaxed goods, but not on remotely accessed software.
- KYKentucky payablesKentucky asks for 1099s only when Kentucky tax was withheld; on the payables side, the issue is a flat 6% use tax that reaches SaaS subscriptions bought from vendors that do not collect.
- MIMichigan payablesMichigan wants a copy of every 1099 issued to a Michigan resident, filed directly for the 1099-NEC, and charges 6% use tax on untaxed goods and delivered software.
- PAPennsylvania payablesPennsylvania wants 1099s by January 31 and 3.07% withheld from Pennsylvania-source payments of $5,000 or more to nonresident contractors. Because SaaS is taxable, use tax on software is a real payables item.
- WVWest Virginia payablesWest Virginia treats contractors paid $2,500 or more as reportable new hires, due within 14 days. Its sales tax reaches many services and prewritten software, so use tax on purchases needs a process.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
More of the Ohio guide
- AccountingAccounting and state tax in OhioCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in OhioSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayrollPayroll taxes and employer rules in OhioWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in OhioRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in OhioCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Ohio Department of Taxation — 2026 Employer and School District Withholding Tax Filing Guidelines
- Ohio Department of Taxation — Sales and Use Tax
- Ohio Adm. Code 5703-9-46 — Automatic data processing, computer services and electronic information services
- Ohio Bureau of Workers’ Compensation — Employers
- Ohio Department of Commerce — Division of Unclaimed Funds, holder reporting
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.