What is a Sole Proprietorship in Ohio?
A Sole Proprietorship is a type of business entity with only one owner, and where that owner have unlimited liability for any debts or other obligations incurred by the proprietorship. Due to a lack of legal separation between the business and the owner, all profits, losses and assets are personal profits, losses and assets of the owner. Profits are taxed as personal income and are not subject to corporate tax.
Unlimited liability means that personal assets of the owner can be taken to pay for debts incurred by the proprietorship, if the proprietorship is unable to honor its obligations. If you wish better protection than this for your personal assets, you need to chose another business type, such as a Corporation or Limited Liability Company.
Why form a Sole Proprietorship?
Many people who chose the sole proprietorship form for their business do so because it’s easy to create and easy to maintain.
Do I have to file paperwork with the Secretary of State to form a Sole Proprietorship in Ohio?
No, sole proprietorships in Ohio are not required to file paperwork with the Ohio Secretary of State to be formed, nor to legally conduct business in Ohio.
However: If the sole proprietorship wishes to do business under another name than that of the owner, a trade name or the use of a fictitious name must be registered with the Secretary of State’s Office. Example: Jennifer Taylor wishes to do business as Jennifer Taylor’s Flowershop. She must report this to the Secretary of State’s Office. The form to use is Name Registration: Form 534A.
The law governing the registration of businesses names and fictitious names is Ohio Revised Code Chapter 1329.
For more information, visit:
- The Secretary of State’s Client Service Center at 180 E. Broad St., suite 103 (Ground Floor), Columbus, Ohio 43215. The service center is open Monday-Friday, from 8 am to 5 pm.
I want to form a Limited Liability Company instead of a Sole Proprietorship – do I have to get a partner for this?
No, it is possible for an individual to form a Limited Liability Company in Ohio without any partners.