Intended or Not, Soon “Co-owners” = Partnership
If you own a business with another person and have not formed a separate entity (such as a Limited Liability Company), under the new Ohio Revised Uniform Partnership Act (“RUPA”) you are likely “partners” with specific rights and responsibilities.
Beginning January 1, 2010, your partnership will be governed by the provisions of this act unless you have a signed partnership agreement. Your partnership agreement can supersede most of these standard rules. For example, the act specifies that each partner is an agent of the business, but your own partnership agreement can stipulate that certain partners may not enter into binding contracts on behalf of the business, allowing stronger oversight and cost control.
The Act also classifies a partnership as its own entity (rather than multiple individuals), resulting in benefits to both the partnership itself as well as the partners. Legal action can be taken by or against the partnership entity (rather than the partners), which must register a statutory agent with the Secretary of State for purposes of receiving service of any legal process or notice.
RUPA specifies how property is owned and transferred by a partnership, and creates a presumption that property purchased with the assets of the partnership is owned by the partnership. It also details the ways in which a partner can be disassociated from a partnership, and allows forcible disassociation of a partner.
Although all partnerships will be governed by RUPA beginning in 2010, existing partnerships may elect to be governed by it effective January 1, 2009. If you would like more information on RUPA, need a partnership agreement drafted or reviewed, or would like a recommendation on the best type of entity for your business, please email Fanger & Adelman or call us at 216-479-6820.
Read the full text of HB 332 http://www.legislature.state.oh.us/bills.cfm?ID=127_HB_332