There are several aspects to starting a business in Ohio, whether you plan to be a sole proprietor or to launch a start-up designed to grow into a large company. Part of the initial process is choosing how to structure your business. The legal entity you choose for your business may directly impact your financial resources, tax liability and daily management.
The Ohio Small Business Development Center program provides resources and information for small business owners and potential entrepreneurs. The SBDC states that Ohio recognizes six types of business structures: corporation, limited liability company, limited partnership, limited liability partnership, general partnership and sole proprietorship.
Each type of legal structure has unique benefits and challenges. There are some restrictions as well. For example, most businesses may not start as limited liability partnerships; you may be able to form an LLP after operating as a general partnership. There are also two types of corporation structures: C Corporation and S Corporation. If you want to register with the IRS as an S Corporation, you must first form a C Corporation.
If you want to run your business yourself, you may choose to be a sole proprietor. The state allows you to work under a trade name as long as you register it properly. Forming an LLC is also a possibility. Even if you still want to function like a sole proprietor, you may choose to create an LLC to protect your personal assets from professional liability. Partnerships and corporations usually require more than one owner or partner. In these structures, owners, partners and shareholders work together to control the actions of the business. They are also liable for its actions.
This general information on business structures is intended to educate and should not be interpreted as legal advice.