Forming a Partnership in OhioA partnership is formed automatically under Ohio law, whether intended or not. In Ohio, a partnership is formed by "any association of two or more persons to carry on as co-owners a business for-profit..." Ohio Revised Code section 1776.22. This is known as a General Partnership and it is the default business that is formed when two or more people start doing an activity that makes money.
General Partnerships in OhioA General Partnership does not have to register with the Secretary of State in order to conduct business in Ohio. A partnership is a distinct entity from the partners. However, a General Partnership does not enjoy the protection from liability that a LLC enjoys.
In a General Partnership, each partner is an owner and can take nearly any action they like in the partnership name. However, each partner is personally liable for all business debts and obligations. This means that one partner is liable for business debts entered into by the other partner, even if they did not know about it.
There are certain measures that a partnership can take to safeguard itself against some of the pitfalls that come with partnerships.
Business Partnership AgreementA partnership agreement is a written document that effectively creates a rule of law as between partners. The partnership agreement spells out the duties and ownership stakes of the partners. The partnership agreement can limit and dictate authority of the partners. The partnership agreement also provides for how to admit new partners, expel current partners, sell stakes in the partnership, and how to dissolve and wind down the partnership.
It is very important to have the partnership agreement written by an attorney, especially an attorney familiar with the laws of the State of Ohio and how those laws will affect your partnership agreement. There are many free partnership agreement templates on the internet, but it is a terrible idea to use one. Attorneys know the problems with 'stock' partnership agreements because attorneys see all the problems they cause when the inevitable dispute arises in the partnership.
The partnership agreement is a binding agreement under Ohio law. Most stock partnership agreements provide that a complete dissolution and ending of the business of the partnership is the solution when any serious dispute among the partners arises.
If you are in a General Partnership, then it is necessary to have an attorney draft a new partnership agreement for you that provides good solutions to common problems and caters to your goals. An attorney can also help you form the best type of partnership for your needs. A partnership agreement should be custom tailored to suit the needs of the business itself, the individual owners, and the current law in Ohio. The attorneys at Harris & Engler are experienced and skillful drafters of partnership agreements for Ohio businesses and ventures.