Ohio at a glance
Partnership law
RUPA (revised)
LLC default split
Proportional to capital
Operating agreement
Not required
Community property
No
Formation cost
$99
Annual cost
No annual report fee
Ohio does not charge an annual report fee for LLCs, and the state does not impose a corporate income tax. Instead, Ohio has a Commercial Activity Tax (CAT) on gross receipts over $150,000. Ohio follows RUPA for partnerships and traditional LLC defaults.
Default partnership rules in Ohio
Ohio adopted RUPA, treating partnerships as separate entities with equal profit sharing by default. Partners have equal management rights and owe fiduciary duties of loyalty and care.
The most important takeaway: profits are split equally by default in Ohio, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Ohio.
LLC defaults in Ohio
Ohio allocates LLC profits and losses in proportion to capital contributions by default. An operating agreement is not required. Ohio does not charge an annual report fee, and the state does not have a traditional corporate income tax. Instead, Ohio imposes a Commercial Activity Tax (CAT) on gross receipts exceeding $150,000.
Ohio defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in Ohio
Under Ohio's RUPA, a partner's departure does not dissolve the partnership. The partnership continues, and the departing partner is entitled to a buyout at fair value.
A written partnership agreement should still address departure terms specifically, including how the buyout value is calculated, the payment timeline, and any non-compete provisions. While RUPA provides a default framework, the details of a buyout can still lead to disputes if not spelled out in advance. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Ohio
Ohio is an equitable distribution state. Business interests acquired during marriage are marital property. Ohio distinguishes between marital property (acquired during the marriage) and separate property (acquired before the marriage or through inheritance). The court divides marital property equitably.
Even though Ohio is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in Ohio
| Formation cost | $99 |
| Annual/recurring cost | No annual report fee |
| State income tax | Yes |
| Partnership law | RUPA (revised) — partnership continues after departure |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
Does Ohio charge annual fees for LLCs?
No, Ohio does not charge an annual report fee for LLCs. The only cost is the $99 formation fee. Ohio also does not impose a traditional corporate income tax, though the Commercial Activity Tax applies to businesses with gross receipts over $150,000.
What is Ohio's Commercial Activity Tax?
Ohio's Commercial Activity Tax (CAT) is a tax on gross receipts rather than net income. It applies to businesses with gross receipts over $150,000. The rate is currently 0.26% of taxable gross receipts over $1 million. This is in addition to individual income tax on business profits.
What is the default LLC profit split in Ohio?
Ohio defaults to proportional allocation based on capital contributions. An operating agreement can establish any arrangement the members choose.
How do partnerships work in Ohio?
Ohio follows RUPA, which treats partnerships as separate entities, defaults to equal profit sharing, and allows a partner to leave without dissolving the partnership.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about Ohio partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Ohio for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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