OHIO Partnership Attorney
If you and at least one other person have a startup idea, you might want to consider a partnership for your business structure. The choice of your business structure is an important decision you need to make as you embark on your new business idea. The entity you choose for your company impacts a variety of important aspects of doing business, including the protection of personal assets and taxation of company profits.
Forming a General Partnership in Ohio
Whether you intended to form a partnership, you might have already done so under Ohio law. If you and another person are performing any activity together for profit, you are already considered a General Partnership (the default partnership structure) under Ohio law.
You are not required to register as a General Partnership in Ohio to conduct business within the state. The partners of a General Partnership do not have the same protection from liability as shareholders of a corporation or members of an LLC. All general partners can take action in the business name, and all general partners are personally liable for business debts entered into by their partners.
Other Types of Partnerships for Mentor Ohio Startups
There are other types of partnerships that you might want to consider for your company, including Limited Partnerships, Limited Liability Partnerships, and Limited Liability Limited Partnership.
A Limited Partnership (LP) must have at least one general partner. General partners have the authority to transact business in the partnership name and have full personal liability for all partnership debts and obligations.
Limited partners do not have the same authority to transact business in the partnership name. Their authority is extremely limited as they are not full owners of the business. However, in return, limited partners enjoy some protection from personal liability for partnership debts and obligations.
Limited Liability Partnerships
A Limited Liability Partnership (LLP) offers partners some personal liability protection for partnership debts and obligations. The partners in an LLP are personally liable for any obligations or debts they create in the partnership name. Partners are not personally liable for the debts and obligations created by other partners.
However, the partnership is liable for all actions, debts, and obligations created by each partner. Therefore, the partnership assets are at risk whenever a partner does anything to incur liability, including committing wrongdoing or making errors. If a partner makes an error or commits wrongdoing, the partner’s personal assets can be at risk as well as the partnership assets, but individual partners are protected from personal liability for that partner’s errors and wrongdoing.
Ohio requires partners to file a Statement of Qualification with the Secretary of State to form an LLP.
Limited Liability Limited Partnership
A Limited Liability Limited Partnership (LLLP) combines some advantages of an LP and an LLP. An LLLP can function just like an LP, but general partners have limited liability and are protected if the partnership is sued. Also, if an individual partner is personally sued, the assets of the partnership are protected from risk. Limited partners of an LLLP continue to enjoy the same limited liability that they would under an LP.
LLLPs are a relatively new type of partnership. Ohio recognizes LLLPs, but not every state has adopted statutes that recognize this type of partnership agreement.
Do I Need a Partnership Agreement?
Even though you may be engaged in a partnership without filing any formal paperwork with the state, you need a partnership agreement. A partnership agreement defines the management roles, responsibilities, and rights of each partner. The agreement also includes terms and conditions regarding other important aspects of the partnership, including the distribution of profits and losses, the term of the partnership, how to transfer partnership interests, and how the partnership may be terminated.
Because a partnership agreement is an enforceable legal contract that can limit a partner’s authority and interest while exposing other partners to greater liability, it is important to consult an experienced Mentor partnership attorney when negotiating and drafting a partnership agreement.
Ask an Ohio Partnership Lawyer About Partnerships
If you have questions about partnerships in Ohio, contact Attorney Heather Moseman to schedule a consultation by calling (440) 255-0832 or by completing the contact form on our website.
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Moseman Law Office
Moseman Law Office is a full-service legal firm located in Mentor, Ohio, serving nearby counties, and providing personalized legal solutions to its clients.
Moseman Law Office
8500 Station St., Ste 210
Mentor, OH 44060
Phone: (440) 255-0832