Legal Question in Business Law in Ohio

Re: Online business in multi state environment

There are a number of things you and your partner should do now in order to protect yourselves and the company. First, you should form a business entity that is separate from yourselves, such as a corporation or a limited liability company. This will help protect you and your partner from potential personal liability to clients and/or creditors of the company. Forming a separate entity will also help you and your partner establish your individual rights with regard to the company.

Second, the new �company� should enter into various agreements with your partner in regard to his software development, and the �company�s� ownership of all the rights to that technology. The �company� should enter into various agreements with you with regard to your promotion and operation efforts. Also, you should transfer ownership of the domain to the �company.�

The above is an over simplification of what you need to do. Properly forming a business is complex, but it can save you headaches in the future. The best time to deal with formation and ownership issues is now when everyone is getting along. I suggest you meet with an attorney to discuss your options. If you would like to discuss this matter in greater detail, you can reach me at 216.241.2500.

Re: Online business in multi state environment

Your situation is classic. As the old saying goes, "a verbal contract isn't worth the paper it's written on." I would suggest that you (and your "partner") seek counsel from a qualified business attorney, who can advise you as to the best way to set this up.

The basic problem is that while everything's going well, you will have no troubles, but if a disagreement arises between you and your partner, there is no easy way to sort things out. What's more, it is entirely possible that your partner is the sole owner of the software (but this is dependant on factors that you did not relate in your question).

The best time to sort things out and get them down on paper is when everyone is getting along. Writing is usually always best. Finally, you may want to look into forming a separate entity for the business, as you most likely have a general partnership right now and there are some potential liability problems that can easily be avoided.

Good luck with your venture!