How to Create a General Partnership in Ohio | A Complete Guide

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Create a General Partnership in Ohio

If you would like to create a general partnership in Ohio, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in Ohio for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in Ohio.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in Ohio, you must be guided by all the factors we have gathered in this article.

Steps in Creating a General Partnership in Ohio

What is General Partnership in Ohio?

A general partnership in Ohio is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like Ohio Corporations or limited liability partnerships.

It is recommended that you consult to Ohio Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in Ohio rather than a general partnership.

– WEBINARCARE EDITORIAL TEAM

Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

  • Providing Professional Services (architectural firms, medical clinics, etc.)
  • Selling goods at retail 
  • Opening a restaurant
  • Ohio Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in Ohio

To create a general partnership in Ohio, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in Ohio. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with Ohio Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in Ohio with North Dakota Secretary of State.

Filing a DBA in Ohio has two methods, by mail and in person., which costs around Varies by county. There is five years validity in renewing your DBA. 

In Ohio, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for some time. You must file a name reservation application in the North Dakota Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Ohio. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Ohio. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Ohio

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Ohio. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in Ohio can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have Ohio Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in Ohio. Numerous general partnership licenses need to be filed and renewed regularly.

In Ohio, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Ohio.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in Ohio easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in Ohio, check out the Best Bank for Ohio Small Business.

Pros and Cons of a General Partnership in Ohio

In forming a general partnership in Ohio, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in Ohio

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in Ohio

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in Ohio

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In Ohio, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Ohio

Even if you have established your general partnership in Ohio, pay your taxes and keep everything up to date so you won’t pay any penalty. 

Ohio taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Ohio Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in Ohio?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as Ohio Corporation converting to an LLC; or Sole Proprietorship to Ohio LLC. This may involve filing conversion documents with the Ohio Secretary of State’s office and paying any required fees.

FAQs

What is a general partnership in Ohio?
A general partnership is a business organization where two or more individuals own and operate a business.
Is it necessary to create a partnership agreement when forming a general partnership in Ohio?
No, it is not required by state law, but it is recommended to have a written partnership agreement.
What is the process of creating a general partnership in Ohio?
The process involves choosing a business name, filing a registration form called Certificate of Partnership with the Ohio Secretary of State and obtaining necessary licenses and permits.
Can a general partnership in Ohio have only one partner?
No, a general partnership requires at least two partners.
Are partnerships taxed in Ohio?
Partnership income is subject to state and federal taxation, with each partner reporting a share of the partnership’s income on their individual income tax returns.
Are there registration fees required to form a general partnership in Ohio?
Yes, there is a registration fee of $99.
How long does it take to register a partnership in Ohio?
It usually takes around 7-10 business days to process a partnership registration in Ohio.
Do all partners have equal rights and responsibilities in an Ohio general partnership?
While general partnerships are based on shared ownership, each partner has the right to act in the partnership and responsibilities related to their position in the business.
Can a non-Ohio resident be a partner in an Ohio general partnership?
Yes, however, they may need to register the partnership as a foreign entity if the partnership conducts business in their state of residence.
What businesses are prohibited from forming general partnerships in Ohio?
Generally, all business types are allowed to form a general partnership in Ohio, but it is important to check for any specific regulations based on industry.
What legal liabilities do Ohio general partners have?
General partners share equal liability and may also be held personally liable for the business’s financial obligations and legal disputes.
How often do Ohio general partnerships need to file taxes?
General partnerships in Ohio need to pay taxes annually, and each partner needs to include a completed Schedule K-1 form with their individual income tax return.
How are Partnership Income and Loss Allocations determined in Ohio?
Partnership income and loss are allocated in proportion to each partner’s percentage of the ownership interest in the partnership.
Can a general partnership change its legal form in Ohio later?
Yes, a general partnership can convert to a different business structure in Ohio, such as a Limited Liability Partnership or Limited Liability Company.
Can Ohio general partners also operate in other states?
Yes, but the partnership may need to register with the Secretary of State’s office of other states if they want to do business in those states.
Are Nondisclosure or Confidentiality agreements recommended in a general partnership in Ohio?
Yes, they are recommended to protect sensitive business data.
Is it Mandatory for an Ohio GP to have a bank account?
While it is not legally required to have a separate bank account for a partnership, it is highly recommended.
Can certain partners elect to receive business profits in exchange for reduced personal liability in an Ohio general partnership?
No, every general partner in Ohio has unlimited liability.
Who can dissolve an Ohio general partnership and what’s the process?
Any partner in a general partnership can initiate the dissolution process through the partnership agreement. Alternatively, the partnership may conclude admitting new partners or buying new assets.
Can general partnerships with a foreign entity form in Ohio?
Yes, after completion of designated paperwork, foreign partners can form a general partnership in Ohio.
Is Attorney involvement mandatory while creating Ohio general partnerships?
Optional. However, it is recommended that you hire a business attorney, tax professional or any other experts do bussiness functionalities legally.
Can litigations arise due to disagreement among partners in General Partnership in Ohio?
Yes, it can lead to drawn-out or expensive litigation. Always have a solid partnership agreement lay out legal dispute resolution options.
Can a sole proprietor carry on Business as General Partnership in Ohio?
Yes.
Can minors be Ohio general partners?
No, only individuals over 18 legally established an Ohio general partnership.
Can I have any business name for a general partnership in Ohio?
No, check for the unique status of business name with Ohio Secretary of State with business name research fingerprint.
Does Ohio have an SOP requirement for General Partnerships?
No, securing a statutory agent or Office situated within the state will fulfill orderly procedures.
Does having a Limited Liability or providing separate legal entity available for general partners, in Ohio?
No, since partners are legaly liable, whether they convert to corporate status (LLP or LLC) isn’t material. Rather, LT Liability element is limited to the amount of money, property, or rights he or she contributed to the company.
Who files for partner withdrawals during a general partnership agreement under Ohio general law?
Each general partner has to submit notifications of ongoing changes.
Can terminated partner retrieve shares of financial benefits once he exits Ohio general partnership?
Each partner’s departure terms conducted by the agreement. Typically a partner is paid the fair market value of his interest in the venture.
Are local, state, or county fees levied on Ohio general partnerships?
Compatible fees may incur from every level i.e. local, state or federal, depending on business operations.
Can the half-year financial statement be posted under Ohio General Partnership?
Ohio General Partnerships are timely required to provide their management report by standard month-end, so limited financial statements posting isn’t a part of the legal protocol.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in Ohio with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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