By Jake Lawson, LLC Formation Strategist
Here’s my honest take: I almost never recommend general partnerships. Yes, you can start one in Ohio, and I’ll show you how. But after helping over 1,200 entrepreneurs choose the right business structure, I’ve seen too many partnership disasters to stay quiet about the risks.
Before you commit to a general partnership, let me explain what you’re really signing up for—and why an Ohio LLC is probably a better choice for 95% of business partnerships.
What Is a General Partnership? (The Unvarnished Reality)
A general partnership is the simplest way for two or more people to go into business together. In Ohio, you don’t even need to file paperwork with the state—just start doing business together and congratulations, you’re legally a partnership.
Sounds simple, right? Here’s the catch: Every partner is personally liable for every business debt and lawsuit. Your business partner signs a bad contract? You’re on the hook. They cause an accident while doing business? Your personal assets are at risk.
Ohio’s legal definition: Under Ohio Revised Code Chapter 1776 (the Uniform Partnership Act), a partnership exists when two or more people carry on a business for profit as co-owners. That’s it. No filing required.
How Ohio General Partnerships Actually Work
Formation Requirements
- State filing: None required (this is not necessarily a good thing)
- Verbal agreement: Legally sufficient to create a partnership
- Written agreement: Strongly recommended but not required
- Cost: $0 to form (but hidden costs add up quickly)
What You Actually Need to Operate
- EIN from the IRS (required for tax filing)
- Partnership agreement (needed for bank accounts)
- DBA filing ($39 with Ohio Secretary of State)
- Business licenses (industry dependent)
- Business bank account (requires formal documentation)
Reality check: By the time you complete everything needed to operate professionally, you’ve done almost as much paperwork as forming an LLC—without any of the legal protection.
The General Partnership Tax Structure
How Partnership Taxes Work
- Partnership files Form 1065 (informational return only)
- Partners receive K-1 forms showing their share of profits/losses
- Partners pay taxes individually on their share
- No double taxation (same as LLCs)
Ohio State Tax Considerations
- No separate entity tax for partnerships
- Partners pay Ohio income tax on their share
- Commercial Activity Tax may apply if gross receipts exceed $150,000
- Local taxes vary by municipality
Jake’s insight: The tax benefits are identical to a multi-member LLC, so this isn’t a reason to choose partnerships over LLCs.
Why I Don’t Recommend General Partnerships (The Real Talk)
After 15 years of helping entrepreneurs, here are the problems I see repeatedly:
Problem #1: Unlimited Personal Liability
What it means: Each partner is personally responsible for ALL partnership debts and obligations.
Real-world scenario: Your partner signs a $50,000 equipment lease without telling you. The business fails. The leasing company can come after your house, car, and personal bank accounts to collect.
The scary part: This applies even if you had no knowledge of or involvement in creating the debt.
Problem #2: Joint and Several Liability
What it means: You’re not just liable for your share—you could be liable for everything.
Real-world scenario: Your business gets sued for $200,000. Even if you’re only a 25% partner, you could be personally liable for the full $200,000 if your partners can’t pay their shares.
Problem #3: Partnership Confusion in the Business World
The reality: Many banks, vendors, and clients don’t understand partnerships.
What I see: Entrepreneurs spending hours explaining their business structure to banks, getting rejected for business credit, and losing professional credibility because partnerships seem “informal.”
Problem #4: Difficult Exit Strategies
The challenge: Partnerships dissolve automatically when partners leave, die, or become incapacitated.
Real consequences: Business disruption, forced liquidation, or complex legal negotiations just to continue operations.
Problem #5: Management Disputes
The problem: Without clear management structure, every decision requires unanimous consent.
What happens: Partners deadlock on important decisions, paralyzing the business until legal intervention becomes necessary.
Step-by-Step: How to Form an Ohio General Partnership (If You Insist)
Despite my reservations, here’s how to do it properly:
Step 1: Plan Your Partnership Structure
Decide on:
- Ownership percentages (how profits/losses are split)
- Capital contributions (who invests what)
- Management responsibilities (who does what)
- Decision-making process (how you’ll resolve disputes)
Jake’s advice: Spend significant time on this. Most partnership failures stem from unclear expectations set at the beginning.
Step 2: Create a Partnership Agreement
Essential elements:
- Partner names and ownership percentages
- Capital contributions and distribution rules
- Management roles and responsibilities
- Decision-making and voting procedures
- Dispute resolution mechanisms
- Exit procedures (death, disability, voluntary departure)
- Business dissolution process
Critical point: While Ohio doesn’t require a written agreement, you absolutely need one for bank accounts, loans, and your own protection.
Step 3: Choose and Register Your Business Name
DBA filing requirements:
- File Form 534a with Ohio Secretary of State
- Pay $39 filing fee
- Choose a name not already in use
- Include “General Partnership” or “G.P.” for clarity
Naming tip: Avoid using just your names (like “Smith & Jones”). Choose something that can outlast personnel changes.
Step 4: Obtain Your EIN
Required for:
- Filing annual tax returns (Form 1065)
- Opening business bank accounts
- Hiring employees (if applicable)
Process: Apply directly through IRS.gov (free) or by fax/mail. Takes 10 minutes online.
Step 5: Research License Requirements
Check for:
- State professional licenses (if applicable)
- Industry-specific permits
- Local business licenses
- Sales tax permits
Resources:
- Ohio.gov business licensing portal
- Ohio Business Gateway for tax registrations
- Local government offices for city/county requirements
Step 6: Open Business Bank Accounts
Required documents:
- Partnership Agreement (signed by all partners)
- EIN Confirmation Letter (CP 575)
- Filed DBA certificate
- Photo IDs for all partners
Banking reality: Many banks prefer LLCs over partnerships. Call ahead to confirm requirements.
Ohio LLC vs. General Partnership: The Honest Comparison
Let me lay out the real differences:
Formation Costs
- General Partnership: $39 (DBA) + $0 (formation) = $39
- Ohio LLC: $99 (state fee) + $0-$225 (registered agent) = $99-$324
Jake’s take: The cost difference is minimal for the protection you get.
Ongoing Compliance
- General Partnership: File Form 1065 annually, maintain records
- Ohio LLC: File Form 1065 annually, maintain records, no annual reports required
Reality: Compliance burden is essentially identical.
Tax Treatment
- Both: Pass-through taxation, no double taxation, same federal and state tax treatment
Conclusion: No tax advantage to partnerships.
Legal Protection
- General Partnership: Zero personal asset protection
- Ohio LLC: Strong personal asset protection for properly maintained entities
This is the game-changer: LLCs protect your personal assets from business debts and lawsuits.
Professional Credibility
- General Partnership: Often viewed as informal, creates confusion
- Ohio LLC: Universally understood and respected business structure
Banking and credit: LLCs have easier access to business banking and credit.
When General Partnerships Might Make Sense (Rare Cases)
In my 15 years of experience, I can count on one hand the situations where I’d recommend a general partnership:
Temporary Joint Ventures
Example: Two contractors partnering on a single construction project with a clear end date.
Professional Partnerships with Existing Insurance
Example: Established professionals (lawyers, doctors) with comprehensive malpractice insurance who want minimal formality.
Family Businesses with Simple Structure
Example: Family members working together who prioritize simplicity over protection.
Important: Even in these cases, I usually still recommend LLCs for the asset protection.
My Recommended Alternative: Ohio Multi-Member LLC
For 95% of business partnerships, here’s what I recommend instead:
Ohio LLC Advantages
- Same tax treatment as partnerships (pass-through taxation)
- Personal asset protection from business debts and lawsuits
- Professional credibility with banks, vendors, and clients
- Flexible management structure (member-managed or manager-managed)
- Easier exit strategies (members can leave without dissolving entity)
- Perpetual existence (continues despite member changes)
Formation Process
- File Articles of Organization with Ohio Secretary of State ($99)
- Appoint registered agent (required for all Ohio LLCs)
- Create operating agreement (not required but essential)
- Obtain EIN (same process as partnerships)
- Get necessary licenses (same requirements as partnerships)
Ongoing Costs
- No annual reports required in Ohio
- Registered agent: $0-$225/year (can be self or hired service)
- Total annual cost: $0-$225 (minimal ongoing expenses)
Making the Right Choice for Your Ohio Business
After helping over 1,000 multi-owner businesses choose their structure, here’s my decision framework:
Choose a general partnership only if:
- You need the absolute cheapest formation option
- Your business has minimal liability risk
- You’re comfortable with unlimited personal liability
- This is a very short-term arrangement
Choose an Ohio LLC if:
- You want personal asset protection (this should be everyone)
- You plan to grow the business significantly
- You want professional credibility
- You need easier access to business banking and credit
- You want flexible management options
My honest recommendation: Unless you’re in one of the rare situations I mentioned above, form an Ohio LLC. The additional cost is minimal, and the protection is invaluable.
Common Ohio Partnership Questions Answered
Do I need to file anything with the state to form a partnership?
No state filing is required to form a general partnership. However, you’ll need to file a DBA ($39) if you want to use a business name other than your legal names.
Can one partner bind the entire partnership to contracts?
Yes, unless your partnership agreement specifies otherwise. This is one of the major risks of partnerships—any partner can potentially create obligations for all partners.
What happens if a partner wants to leave?
Unless your partnership agreement says otherwise, the partnership legally dissolves when any partner leaves. This can force liquidation of business assets even if other partners want to continue.
Are partnerships required to have registered agents in Ohio?
No, but if you file a Statement of Partnership Authority (optional), you must appoint a statutory agent.
How do partnership taxes work in Ohio?
The partnership files an informational return (Form 1065) but doesn’t pay taxes. Partners receive K-1s and pay taxes on their share of profits on their personal returns.
The Bottom Line on Ohio General Partnerships
Look, I’ll help you form a general partnership if that’s what you really want. But as someone who’s seen hundreds of business partnerships succeed and fail, I have to be honest about the risks.
The math is simple: An Ohio LLC costs $60 more than a partnership but provides thousands of dollars worth of liability protection. That’s the best insurance premium you’ll ever pay.
My strong recommendation: Form an Ohio multi-member LLC instead. You’ll get the same tax benefits, better legal protection, and professional credibility that will serve your business well as it grows.
If you’re absolutely determined to form a partnership, at least invest in a comprehensive partnership agreement prepared by an attorney. And consider converting to an LLC once your business generates enough revenue to justify the additional protection.
Ready to make the smart choice for your Ohio business partnership? I’ve helped hundreds of Ohio entrepreneurs choose the right structure. Check out my complete Ohio LLC formation guide or learn about the best LLC formation services for 2025.
Still have questions about partnerships vs. LLCs for your specific situation? Send me a message—I personally read and respond to every inquiry within 24 hours.