Brown County Ohio Chamber of Commerce

A Guide To Starting a Business In Brown County

TYPES OF BUSINESS STRUCTURES

Before you begin in business, you must determine what the organizational structure of your business will be. Business structures permitted in the State of Ohio include: Sole Proprietorship, Partnership, Limited Partnership, Partnership Association, and Corporation. You’ll probably want to consult with your accountant or attorney to learn the advantages, disadvantages, and tax consequences of each type of business structure.
Brief information about several structures follows:

Sole Proprietorship
In a Sole Proprietorship, the individual is the employer and sole owner of all assets. The Sole Proprietor realizes the full profit from the business but also is responsible for all debts and obligations of the business. The individual’s outside assets such as home, car and personal bank account also are subject to claims of business creditors. A Sole Proprietorship is easy to organize since the person needs only to obtain the necessary licenses and permits for his/her particular business. Also, there is no double taxation as the income is taxed through the owner. It may be difficult, however, for a Sole Proprietor to raise capital from outside sources. In the event of the owner’s death, there could be legal complications.

General Partnership
A partnership consists of two or more owners with the profits and losses being equally shared. Each partner is liable for business debts and obligations. Each partner’s outside assets are subject to claims of creditors.

Corporation
A corporation is a legal structure that exists separately from the people who create it. Incorporation limits an individual’s liability in case the business fails or is sued. Because the Corporation is a separate legal entity, a corporate tax must be paid on the money a corporation makes. The individual must pay personal income tax on the money he/she takes out of the business as a salary. A person wishing to incorporate must file Articles of Incorporation with the Ohio Secretary of State. A statutory agent also must be designated for the Corporation. At the time of filing, a fee based on the number of authorized shares must be paid. Further information on incorporating may be obtained by contacting:

Ohio Secretary of State
Corporation Services
30 E. Broad St., 14th Floor
Columbus, OH 43215
614-466-3910

Before shares of the Corporation may be sold, they must be registered with or exempted by the Ohio Department of Commerce, Division of Securities.

Ohio Department of Commerce
Division of Securities
Two Nationwide Plaza
Columbus, OH 43215
614-466-3440