How to Start a Limited Partnership in Ohio | A Step-by-Step Guide

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Start a Limited Partnership in Ohio

A limited partnership is an attractive business structure for those who want to start an LLC in Ohio. It combines the best of both worlds, offering limited liability protection for limited partners and the ability to manage the business for general partners actively. This article will outline the steps on How to Start a Limited Partnership in Ohio, covering everything from researching and preparing to registering your limited partnership with the Ohio government and beyond.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Ohio Limited Partnership, all the steps in this article must guide you.

Steps in Starting a Limited Partnership in Ohio

What is a Limited Partnership?

A Limited Partnership (LP) is a business structure comprising two types of partners: general and limited. It is a legal entity distinct from its partners and combines certain features of partnerships and corporations.

General partners are responsible for the day-to-day management of the business, make decisions on behalf of the partnership, and have unlimited liability for the partnership’s debts and obligations. This means their assets can be seized to cover the partnership’s liabilities if necessary.

Limited partners, on the other hand, are passive investors who do not participate in business management. They provide capital to the partnership and receive a share of the profits in return. Their liability is limited to the amount they have invested in the partnership, meaning that their assets are generally not at risk for the partnership’s debts beyond their investment.

It is suggested that you speak with a legal professional before you begin setting up your limited partnership in Ohio. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Partnership in Ohio

To form a limited partnership in Ohio, you must consider following the below guidelines that, include research and preparation, establishing the limited partnership structure, drafting the limited partnership agreement, registering the limited partnership, complying with additional Ohio requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Ohio, you must familiarize yourself with this business structure’s laws and regulations. In the United States, limited partnerships are primarily governed by the Uniform Limited Partnership Act (ULPA). However, each state has its laws and regulations, so it’s essential to know the specific rules that apply in Ohio.

While researching, consider whether a limited partnership is the most suitable structure for your business needs. Limited partnerships are ideal for businesses with one or more passive investors who want to avoid taking on the business’s day-to-day responsibilities. Consider alternative structures like Ohio Corporations if a limited partnership doesn’t seem right.

Step 2: Establishing The Limited Partnership Structure

Once you’ve determined that a limited partnership is the right choice for your business, the next step is to establish the structure of your partnership. This involves choosing a name, hiring a Statutory Agent, and determining the roles of the partners.

Choose a Name for the Limited Partnership

The name you choose for your limited partnership is essential to your business identity. In Ohio, there are specific requirements that your limited partnership name must meet, such as including the words “Limited Partnership” or the abbreviation “LP.” Before settling on a name, conduct Ohio Business Name Search through the Ohio Secretary of State Business Search to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Ohio may include:

  • The name must be unique and distinguishable from other business entities registered in the state.
  • The name must include the words “Limited Partnership,” “L.P.,” or “LP.”
  • Certain words and phrases may be restricted or require additional approval from Ohio.

If the limited partnership name is available, you may choose to reserve it for a specific period of some time by filing a name reservation application and paying the online name reservation fee of $39 and mail name reservation fee of $39. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person., which costs around Varies by county. In addition, the DBA’s validity in Ohio is five years, which you can file in Ohio Secretary of State.

You can check out how to file a DBA in Ohio for clearer understanding.

Hire a Statutory Agent

A Statutory Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LP. In Ohio, your Statutory Agent must:

  • Be a resident of Ohio or a business entity authorized to do business in the state
  • Have a physical address in Ohio (P.O. boxes are not acceptable)

Choosing a reliable and responsible Statutory Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Statutory Agent or appoint a friend or family member, or hire a professional Ohio Statutory Agent Services. With that, we reviewed some of the best-registered agent services and provided features as an add-on with their formation packages for you to check out.

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Determine the Roles of the Partners

A limited partnership consists of two types of partners: general and limited. General partners are responsible for the day-to-day management of the business and have unlimited liability for the partnership’s debts and obligations. Limited partners, on the other hand, are passive investors who don’t participate in the management of the business and have limited liability up to the amount they’ve invested in the partnership.

As you structure your partnership, carefully consider who will take on the roles of general and limited partners. Remember that general partners will have more responsibility and potential liability, so choose those individuals wisely.

Step 3: Drafting the Limited Partnership Agreement

With the partnership structure established, the next step is to draft a limited partnership agreement. This document sets forth the partnership’s terms and conditions and should be carefully crafted to ensure it meets all legal requirements in Ohio.

Include Essential Elements

A well-drafted limited partnership agreement should include the following essential elements:

  •  Name of the limited partnership
  •  Purpose of the limited partnership
  •  Duration of the limited partnership
  •  Names and addresses of general and limited partners
  •  Capital contributions of each partner
  •  Allocation of profits and losses
  •  Management and decision-making structure
  •  Process for admitting new partners

Address Optional Elements

In addition to the essential elements, it’s a good idea to address the following optional elements in your limited partnership agreement:

  •   Transfer of partnership interests
  •   Withdrawal or removal of partners
  •   Dissolution and winding up the process

To ensure your limited partnership agreement is legally sound and compliant with Ohio laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Ohio with experience in limited partnerships.

Step 4: Registering the Limited Partnership

Once your limited partnership agreement is in place, the next step is to register your limited partnership with the Ohio government. This process typically involves filing a Certificate of Limited Partnership with the Ohio Secretary of State’s office.

Prepare and File the Certificate of Limited Partnership

To file the Certificate of Limited Partnership, complete the required forms, which can typically be found on the Ohio Secretary of State. Include all necessary information and signatures, and pay the filing fee of $99.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Ohio government, you’ll need to obtain Ohio Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your partnership for tax purposes and is required for filing federal and state tax returns.

The application of an EIN 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-4 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.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Register For Ohio Taxes

Depending on your business activities and location, you may need to register for certain Ohio taxes. Check with the Ohio Department of Taxation or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Ohio Requirements

In addition to registering your limited partnership with the Ohio government, there may be other requirements you need to meet to operate your business legally. These may include obtaining business licenses or permits, filing annual reports with the Ohio Secretary of State, and maintaining proper records and documentation.

Obtain Any Necessary Business Licenses or Permits.

Depending on the nature of your business, you may need to obtain various licenses or permits from state or local authorities. Check with the Ohio Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Ohio, the costs of Ohio Business Licenses range from $50 – $300.

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

File Biennial Reports 

Ohio require limited partnerships to file Biennial Reports with the Ohio Secretary of State’s office. These reports typically include updated information about the partnership, such as the names and addresses of partners and any changes to the partnership agreement. 

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Maintain Proper Records and Documentation

As a limited partnership, it’s essential to maintain proper records and documentation, including copies of your limited partnership agreement, tax returns, financial statements, and any other relevant documents. These records should be kept in a safe and accessible location and may be required in the event of an audit or legal dispute.

Step 6: Ongoing Management and Compliance

Starting a limited partnership in Ohio is the beginning. To ensure the ongoing success of your business, it’s crucial to stay on top of management and compliance tasks. It is better to have regular meetings with your partners to ensure everyone is on the same page regarding the direction and performance of your business. These meetings can also help identify and address issues or concerns before they become more significant problems.

As a limited partnership, you must file annual tax returns and pay any required taxes at the federal and state levels. Consult with a tax professional to ensure you comply with all tax laws and deadlines.

Advantages of Limited Partnerships in Ohio

Here are some key advantages of forming a limited partnership in Ohio:

  • Limited Liability for Limited Partners: One of the main benefits of a limited partnership is that limited partners enjoy limited liability protection. This means their assets are generally not at risk for the partnership’s debts and obligations beyond their investment in the partnership. This limited liability can be attractive for investors who want to participate in a business venture without taking on the same level of risk as general partners.
  • Pass-through Taxation: Limited partnerships are typically subject to pass-through taxation, meaning the partnership’s profits and losses flow to the partners’ individual tax returns. This structure avoids double taxation, as the partnership is generally not subject to federal income tax. Instead, each partner is responsible for paying taxes on their share of the partnership’s income at their individual tax rate.
  • Flexibility: A limited partnership allows for flexibility in the management structure. General partners have the authority to make decisions and manage the business, while limited partners can remain passive investors. This division of responsibilities and decision-making power can appeal to both parties. It allows general partners to maintain control over the business operations and limited partners to invest without being involved in day-to-day management.
  • Ease of Formation: A limited partnership is typically less complicated and expensive than a corporation. Limited partnerships generally require filing a Certificate of Limited Partnership with the state and creating a limited partnership agreement, which is less complex than the documentation required for a corporation.
  • Attracting Capital: Limited partnerships can attract capital from investors who want to participate in a business venture without taking on the responsibilities and risks of being a general partner. This structure can help businesses secure funding while allowing limited partners to benefit from the partnership’s profits.
  • Continuity of the Partnership: In Ohio, limited partnerships can continue to exist even if one of the general partners dies, withdraws, or is replaced, as long as there is at least one remaining general partner. This continuity can provide stability and help ensure the ongoing success of the partnership.

Can a Foreign Limited Partnership Do Business in Ohio?

Yes, a foreign Limited Partnership can do business in Ohio by registering as a foreign LP with the Ohio Secretary of State or appropriate state agency. The foreign LP must provide a certificate of good standing from its home state and pay any required registration fees.

What are the Tax Implications of Forming a Limited Partnership in Ohio?

Limited Partnerships are generally considered pass-through entities for tax purposes, meaning that the profits and losses of the business are passed through to the individual partners, who report them on their personal income tax returns. However, specific tax implications may vary depending on the state and the nature of your business. It is recommended to consult with a tax professional to determine your specific tax obligations.

FAQs

What is a limited partnership?
A limited partnership is a business structure where there are both general partners (who manage the company) and limited partners (who contribute capital but do not participate in management).
How do I start a limited partnership in Ohio?
To start a limited partnership in Ohio, you need to file a certificate of limited partnership with the Ohio Secretary of State.
What is required to file a certificate of limited partnership in Ohio?
To file a certificate of limited partnership in Ohio, you will need the names and addresses of all general and limited partners, the name and business address of the limited partnership, and the name and address of the agent for service.
What is the role of the agent for service in Ohio?
The agent for service in Ohio is responsible for receiving legal notifications and other official documents on behalf of the limited partnership.
How much does it cost to file a certificate of limited partnership in Ohio?
It costs $125 to file a certificate of limited partnership in Ohio.
Can I file a certificate of limited partnership online in Ohio?
Yes, you can file a certificate of limited partnership online through the Ohio Secretary of State’s website.
How long does it take to process a certificate of limited partnership filing in Ohio?
It typically takes about ten business days for the Ohio Secretary of State to process a certificate of limited partnership filing.
Do I need a lawyer to start a limited partnership in Ohio?
No, you are not required to have a lawyer to start a limited partnership in Ohio, but it can be helpful to consult with one to ensure that all legal requirements are met.
What is a registered agent in Ohio?
A registered agent in Ohio is responsible for receiving legal documents and other official communications on behalf of a business entity.
Can a limited partner be the registered agent for a limited partnership in Ohio?
Yes, a limited partner can be the registered agent for a limited partnership in Ohio as long as they have a physical street address in the state.
How much does it cost to appoint a registered agent in Ohio?
The cost of appointing a registered agent in Ohio varies depending on the provider, but typically ranges from $50 to $500 per year.
How do I make changes to my limited partnership in Ohio?
You can make changes to your limited partnership in Ohio by filing the appropriate forms and paying the necessary fees with the Secretary of State.
What is a certificate of amendment in Ohio?
A certificate of amendment in Ohio is a legal document that outlines changes to the limited partnership, such as a change in the name or address.
How do I file a certificate of amendment in Ohio?
To file a certificate of amendment in Ohio, you need to complete the appropriate form and submit it to the Secretary of State along with the appropriate filing fee.
What is a limited liability limited partnership in Ohio?
A limited liability limited partnership in Ohio is a business structure that combines elements of a limited partnership and a limited liability company, providing liability protection to all partners.
Can I convert my existing partnership to a limited partnership in Ohio?
Yes, you can convert your existing partnership to a limited partnership in Ohio by filing the appropriate forms with the Secretary of State.
How do I dissolve a limited partnership in Ohio?
To dissolve a limited partnership in Ohio, you need to file a certificate of cancellation with the Secretary of State.
Can I reinstate a cancelled or revoked limited partnership in Ohio?
Yes, you can reinstate a cancelled or revoked limited partnership in Ohio by filing the appropriate forms and paying the necessary fees.
What is the Ohio Business Gateway?
The Ohio Business Gateway is a website that provides online access to government services and information for businesses in Ohio.
Can I apply for business licenses and permits through the Ohio Business Gateway?
Yes, you can apply for certain business licenses and permits through the Ohio Business Gateway.
What is the Ohio secretary of state’s business services website?
The Ohio Secretary of State’s business services website is a portal that provides access to filing and other business services in Ohio.
What is the Ohio Department of Industrial Relations website?
The Ohio Department of Industrial Relations website is a resource for employers and workers in Ohio, providing information on labor laws and workplace safety.
What is the Ohio Small Business Development Center?
The Ohio Small Business Development Center is a resource for entrepreneurs and small business owners in Ohio, offering counseling, training, and other services.
How do I apply for a tax ID number in Ohio?
To apply for a tax ID number in Ohio, you will need to file Form SS-4 with the IRS.
What taxes do limited partnerships in Ohio need to pay?
Limited partnerships in Ohio may be subject to state and federal income taxes, as well as various other taxes depending on the nature of the business.
What is the Ohio Revitalization Fund?
The Ohio Revitalization Fund is a state-funded program that provides financing to businesses for the purposes of expanding or relocating operations in the state.
Can non-residents form a limited partnership in Ohio?
Yes, non-residents can form a limited partnership in Ohio as long as all legal requirements are met.
How do I qualify to do business in Ohio as a foreign limited partnership?
If you are a foreign limited partnership looking to do business in Ohio, you will need to register with the Ohio Secretary of State and appoint a registered agent in the state.
What is a limited partnership in Ohio?
In Ohio, a limited partnership is a legal structure where two or more people come together to form a business in which one or more of the partners has limited liability.
What is required to file a Certificate of Limited Partnership in Ohio?
To file a Certificate of Limited Partnership in Ohio, you need the name of your partnership, the names of the general and limited partners, and the percentage of ownership each partner has.
What is a general partner in Ohio?
In Ohio, a general partner is a partner who has unlimited liability for the debts and obligations of the limited partnership.
What is a limited partner in Ohio?
In Ohio, a limited partner is a partner who has limited liability for the debts and obligations of the limited partnership.
Do I need to have a written partnership agreement to start a limited partnership in Ohio?
While not required by Ohio law, it is highly recommended that you draft a written partnership agreement to help structure your limited partnership.
Can a limited partnership in Ohio be formed by only one partner?
No, a limited partnership in Ohio requires at least two partners.
What is the difference between a limited liability partnership and a limited partnership in Ohio?
In Ohio, a limited liability partnership provides all partners with limited liability, whereas in a limited partnership, only the limited partners have limited liability.
Can a limited partner participate in the management of a limited partnership in Ohio?
Yes, a limited partner can participate in the management of a limited partnership in Ohio, but doing so may result in the loss of limited liability.
Can a limited partnership in Ohio own property?
Yes, a limited partnership in Ohio can own property.
How are the profits and losses of a limited partnership in Ohio distributed?
The profits and losses of a limited partnership in Ohio are distributed based on the percentage of ownership of each partner.
Am I required to file a tax return for my limited partnership in Ohio?
Yes, you are required to file a tax return for your limited partnership in Ohio.
Are there annual fees for maintaining a limited partnership in Ohio?
Yes, there are annual fees for maintaining a limited partnership in Ohio.
Can a limited partnership in Ohio be dissolved?
Yes, a limited partnership in Ohio can be dissolved by the general partners or by court order.
How do I dissolve my limited partnership in Ohio?
To dissolve a limited partnership in Ohio, you need to file a Certificate of Cancellation with the Ohio Secretary of State.
Can I change the name of my limited partnership in Ohio after it has been formed?
Yes, you can change the name of your limited partnership in Ohio by filing an Application for Registration of a Limited Partnership Name with the Ohio Secretary of State.
Can I add partners to my limited partnership in Ohio?
Yes, you can add partners to your limited partnership in Ohio by drafting and filing an amendment to your Certificate of Limited Partnership.
How do I remove a partner from my limited partnership in Ohio?
To remove a partner from your limited partnership in Ohio, you need to follow the procedures outlined in your partnership agreement or Ohio law.
Can I transfer ownership of my limited partnership in Ohio to someone else?
Yes, you can transfer ownership of your limited partnership in Ohio by filing an amendment to your Certificate of Limited Partnership.
Can I sell my ownership in the limited partnership in Ohio to someone else?
Yes, you can sell your ownership in a limited partnership in Ohio to someone else.
Are there any restrictions on who can be a limited partner in Ohio?
No, there are no restrictions on who can be a limited partner in Ohio.
Are there any taxes I need to pay to form a limited partnership in Ohio?
Yes, there are registration and filing fees for forming a limited partnership in Ohio.
How long does it take to form a limited partnership in Ohio?
It takes approximately seven to ten business days to process a Certificate of Limited Partnership in Ohio.
Do I need a lawyer to help me start a limited partnership in Ohio?
While not required, it is recommended that you consult with a lawyer when starting a limited partnership in Ohio.
What are my personal liabilities when starting a limited partnership in Ohio?
As a general partner in a limited partnership in Ohio, you have unlimited personal liability for the debts and obligations of the partnership.
What are the steps involved in starting a limited partnership in Ohio?
The steps involved in starting a limited partnership in Ohio include choosing a name, filing a Certificate of Limited Partnership, drafting a partnership agreement, and registering with the appropriate state agencies.
Where can I find more information about starting a limited partnership in Ohio?
You can find more information about starting a limited partnership in Ohio on the Ohio Secretary of State’s website, or by consulting with a business lawyer.

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Conclusion

Starting a limited partnership in Ohio can be a rewarding experience, providing you with the benefits of limited liability protection for passive investors and the opportunity to manage your business actively. By following the steps outlined in this article and staying on top of ongoing management and compliance tasks, you can establish a successful limited partnership and enjoy the benefits of this unique business structure.

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