There are many different types of business entities to choose from. It is important to understand the benefits and drawbacks to a partnership, LLC, and corporation before you form an Ohio business. A Chardon business formation attorney can help you create a business with comprehensive legal protection in place from your first day of operation.
Our experienced business formation attorneys can answer any questions you have about selecting a business entity type. Here are some of the most common business entities formed in Ohio:
A for-profit corporation does not have the liability protection of an LLC or the tax benefits of a nonprofit corporation. It is, however, the proper legal entity for most businesses that intend to offer shares of ownership to the general public. (Additional regulations and security laws apply to those transactions.)
A nonprofit corporation enjoys tax-exempt status. Because of this, it must meet certain requirements in the operation of its business. It is important to be very careful about selecting a nonprofit business entity. Improper use of this tax-exempt status can subject owners to tax penalties, fines, revocation of business licenses, and even criminal charges.
Professional associations are a business entity that can only be used for specific Ohio professionals. The qualified professions are listed in the Ohio Revised Code.
LLCs are one of the most popular business entities used in Ohio. They allow owners (known as “members”) to protect their personal assets from being used to satisfy the debts of the business. Owners must properly form and operate an LLC in order to access these legal benefits.
Partnerships are governed by the Ohio Uniform Partnership Act. A partnership involves two or more partners who agree to equally share profits and losses of the business and have an equal say in the management of the business. In a limited partnership, one or more limited partners is protected by only being liable for business debts to the extent of their initial investment. The limited partner may not be involved in the management of the business. A limited partnership requires at least one general partner who is liable for all debts of the business.
A limited liability partnership combines some features of partnerships with some features of LLCs. In an LLP, each partner is liable for his or her own misconduct and negligence, but not that of the other partners. This limits each partner’s potential liability. As in a general partnership, each limited liability partner will usually have a say in the management of the business.
As you can see, there are many different business entities to choose from. It is critical to select the right entity that will best protect your business. The Chardon business formation lawyers at Niekamp Weisensell Mutersbaugh & Mastrantonio, LLP are experienced in all legal matters surrounding a business formation. Let us help you form a business with as much legal protection as possible so that you can run your business confidently. Contact us to schedule a consultation.
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