Setting Up a Business Partnership in Ohio

In Ohio, you can form several types of partnerships: 1) General Partnership (GP), where all partners share equally in management and liability; 2) Limited Partnership (LP), which has both general partners who manage the business and limited partners who are primarily investors; 3) Limited Liability Partnership (LLP), which provides some liability protection for all partners; and 4) Limited Liability Limited Partnership (LLLP), which combines features of LPs and LLPs. Each structure offers different levels of liability protection and management flexibility.

It depends on the type of partnership. For a General Partnership, no state filing is required in Ohio, though it's formed automatically when two or more people operate a business for profit. However, Limited Partnerships (LPs), Limited Liability Partnerships (LLPs), and Limited Liability Limited Partnerships (LLLPs) must file with the Ohio Secretary of State. These entities require a Certificate of Limited Partnership or Statement of Qualification and payment of the appropriate filing fee.

While Ohio law doesn't legally require a written partnership agreement, operating without one is extremely risky. A written partnership agreement is strongly recommended as it establishes the rights, responsibilities, profit-sharing arrangements, decision-making processes, and procedures for resolving disputes or dissolving the partnership. Without a written agreement, your partnership will be governed by default provisions in the Ohio Revised Uniform Partnership Act, which may not align with your intentions.

Partnerships in Ohio are generally considered 'pass-through' entities for tax purposes. This means the partnership itself doesn't pay income taxes; instead, profits and losses 'pass through' to the individual partners who report them on their personal tax returns. Ohio partnerships must file an Ohio IT-4708 (Pass-Through Entity Composite Income Tax Return) and may be subject to the Commercial Activity Tax (CAT) if gross receipts exceed $150,000. Partners should also be aware of potential self-employment taxes and quarterly estimated tax payment requirements.

Liability varies by partnership type in Ohio. In a General Partnership, all partners have unlimited personal liability for partnership debts and obligations. In a Limited Partnership, general partners have unlimited liability while limited partners' liability is restricted to their investment. Limited Liability Partnerships (LLPs) provide partners protection from personal liability for the negligence of other partners, though partners remain liable for their own negligence and partnership contractual obligations. LLLPs combine these features, giving limited partners investment-only liability and general partners some liability protection.

To register a partnership name in Ohio, first check name availability through the Ohio Secretary of State's business name search. For partnerships requiring state registration (LPs, LLPs, LLLPs), the name is registered when filing formation documents. For general partnerships, you can register a trade name or fictitious name by filing a Name Registration form with the Ohio Secretary of State. The name must be distinguishable from other registered business names and comply with Ohio naming requirements. Registration fees apply, and names are generally registered for 5-year periods.

Ohio partnerships may need various licenses and permits depending on location and business activities. These might include: 1) Local business licenses from your city or county; 2) Professional licenses for regulated professions (e.g., law, accounting, medicine); 3) Sales tax vendor's license if selling taxable goods; 4) Specialized permits for activities like food service, alcohol sales, or construction; and 5) Zoning permits if operating from a physical location. Check with the Ohio Business Gateway, your local government, and relevant professional boards to determine your specific requirements.

To dissolve a partnership in Ohio, follow these steps: 1) Review your partnership agreement for dissolution procedures; 2) Hold a partnership meeting and document the dissolution decision; 3) For registered partnerships (LPs, LLPs, LLLPs), file a Certificate of Dissolution with the Ohio Secretary of State; 4) Notify all creditors, clients, and business associates; 5) Cancel business licenses, permits, and registrations; 6) File final tax returns; 7) Distribute remaining assets according to ownership interests or partnership agreement terms; and 8) Maintain records for at least seven years after dissolution.

Yes, Ohio law allows partnerships to convert to other business entities. You can convert a partnership to an LLC, corporation, or another partnership type through a statutory conversion process. This requires preparing a written plan of conversion, obtaining partner approval according to your partnership agreement, filing Certificate of Conversion documents with the Ohio Secretary of State, and paying the required filing fees. The conversion process preserves the business's continuity while changing its legal structure. Consult with a business attorney to navigate this process correctly, as it has significant legal and tax implications.