Title & Escrow Companies Bookkeeping in Ohio

Escrow and trust account requirements in Ohio are set by state law and by the underwriters you are appointed with, and they typically cover how funds are held, how frequently the account is reconciled, and what records must exist for each file. The reconciliation that satisfies all of them is the three-way: escrow bank balance, escrow book balance, and the sum of the individual file ledgers, agreeing at one point in time. Two of the three will frequently agree while the third does not, which is precisely why the third exists. The entity is registered with the Ohio Secretary of State and, where the company sells anything taxable alongside closings, with the Ohio Department of Taxation as well — the Commercial Activity Tax applies separately to gross receipts above a threshold, in addition to sales tax. We keep that reconciliation current and documented; whether it meets your specific Ohio obligation is a determination for you, your counsel, and your underwriter.

Ohio levies a real estate transfer or deed tax at closing, which means every file passes tax collected from the parties through your escrow account to a recording authority. It is pass-through in the purest sense — never income, never expense, simply money moving across your ledger — and files that run it through revenue can overstate a title company's income by a multiple. Recording fees and any state or county surcharge behave the same way, and the settlement statement is the source document that has to reconcile to what actually left the account.

Registering to do business in Ohio runs through the Ohio Secretary of State, with tax accounts through the Ohio Department of Taxation and employer accounts through the Ohio Department of Job and Family Services. Ohio treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.

Beyond sales tax, Ohio levies the Commercial Activity Tax (CAT) on taxable gross receipts sitused to Ohio, payable by the business, separately from and in addition to sales tax. a low rate applied to a very broad base, with a substantial annual exclusion that has been raised in recent years — which has taken many smaller businesses out of the filing requirement entirely. The consequence for your books is direct: CAT is on gross receipts, not profit, so a low-margin business can owe it in a loss-making year. Tracking Ohio-sitused receipts separately through the year is what makes the return a lookup rather than a reconstruction. It is registered and filed separately from anything the Ohio Secretary of State handles, and it accrues on revenue rather than on profit — so it is recorded as it builds, not discovered at year end.