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You should form an LLC or S Corp. The LLC will give you a bit more flexibility when you first start and as you get more successful you can transition to an S Corp. With either you'll have to name the people in the company and vote for a manager in the LLC and CEO in the S Corp.
Any competent attorney can explain things to you and get the ball running. An LLC will take you about a month to do about the same for an S Corp.
Hope that kinda helps.
Atticus Finch
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I am not a lawyer, but here are some common sense advice I can impart from watching others start their biz. Important to get decisions documented. Also good to document things like expenses, decisions made so it is set in stone (email trace exists,etc) as people tend to forget verbal agreements.
- Define goal of the company, the overarching north star that you both agree to and will follow.
- Think about different ways the company can disolve and figure out what is fair to do in each situation. What happens when one buys out the other, what happens if you take on more investors/partners, sell the company, what happens to equipment, raw materialsetc.
- All work put in and any intellectual property belongs to the company, period. This prevents one party from walking away and saying he/she did the work so it belongs to him/her.
- The shares/ownership should be clear. He puts in "sweat" equity but you put in hard earned $. It should be clear the value of each as far as % in the company. I would go for 50/50 or greater for you so he/she cannot simply say that his decisions are final. It will also dictate how each will share in the profits.
- Decisions (especially big ones) should have some kind of majority approval.
- Pulling in more workers can be paid by a set price/hourly.
- Keep strict financial info on revenue and expenses. This avoids resentment that they purchased something with their own $ and did not get reimbursed.
Goodluck!
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great post island
business with trusted friends...most likely will end bad without all the details laid out in writing...money does weird shit to friends and family...having a partnership type agreement will be extremely helpful...save you lots of money and anguish
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Feeling under appreciated is common when one does the funding and the other partner does the labor, it’s human nature to feel like they’re doing all the work because one can see results and progress and forget nothing gets done without funds. Communication is key in a partnership let them know you feel unappreciated and clearly define each partners roll and compensation / cut in the business, figure out what’s fair for both of you and put together an agreement / contract. It’s tricky working with a close friend because sometimes one may not speak out when feeling unappreciated, but that’s what’s most important communication, and like earlier comments we used legal zoom.
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A partnership is a leaky ship!
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Also, don't discount your contributions to the business whether it is General & Administration, HR, Procurement or Sales function. These are all important and necessary tasks.
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Easy to start, tough to unwind especially in this type of arrangement. LLC or corporation for sure.
Plan for how to dissolve, in other words, the divorce agreement should be negotiated upfront because one or the other eventually feels butt hurt. Money and sweat equity aren't equal in either parties eyes so lay it all out.
Unfortunately you are already in bed with this person but better to sort things out now before resentment sets in.
Set compensation to owners and reimbursements early. Maybe one drives a VW and the other a Tesla, decide what the auto allowances are, the meals and entertainment budget and think long and hard about any major decisions and how you are going to approach them.
Best of luck to you.
BTW Legalzoom is fine, if you already have some sort of legal, accounting and business acumen.
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Good info islandtalent
There's a book called incorporate and grow rich on amazon. It explains the types of corporations and tells you pros and cons of each. Well worth the $50 to buy it. It will also arm you with quesitons for the lawyer which should reuce their fees charged.
Congrats on thinking about this first.
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What type of business are you starting?
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You're looking for a corporate formation attorney. Other types of attorneys can typically do it as well. Many estate planning attorneys will be able to help out.
Someone else mentioned doing an LLC or LLP, and I'd recommend the LLP. You guys will each get the same amount of stock and voting power.
Just remember, like others have said: something like this is a marriage, and can be just has hard to unwind. It will take the same commitment to preservation as a marriage.
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Actually it is worse than a marriage because in a marriage you can have disagreements over money and othe stuff, settle the argument, make happy love and be cool again.
In business there is no happy love to make things copacetic, it's only money and generally someone gets butt hurt and therein begins the tension and beginning to the end.
I once had an upper level accounting professor say in his best Chicago Jew throaty, nasally voice "No Pahtners"
I agree with his comments and warn my clients regularly.
If someone puts in money make it a loan, pay it according to its terms and if things go well you can always throw more money at them in a kicker.
Much easier management wise and business wise. You can always pay them for their business consultation and advice if they have more to offer than money.
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Hey hope all is well since the last time we chated
In reguards to your post on buisness. Since i have started Multiple businesses in the past.
My advise is this.
1 have a buisness plan
2 be warry of starting buisness with family and friends.
3 get a buisness name
4 get a buisness licence
5 get a resellers permit
Once u have these basics then decide on what your going to protect yourself from i case shit hits the fan.
1 law suits
2 liability
3 irs
Most of this depends on your buisness. If u need more detailed help just pm me.
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You can form an LLC in an hour
Just dont co-mingle funds
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Send me your phone number. I am a lawyer
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It all depends on whether asset protection, tax savings, flexibility or other goals are the primary desire. Anyone can bind any other person to act within a corporation or a LLC but all of the goals need to be evaluated to determine to see which structure is best. For anyone not bringing money to the structure, they need to consider that acquiring an interest through services will generally be taxable income to that person.
I usually find that if people are trying to avoid self employment income then they'll go with an "S" corporation and if they are trying to maximize asset protection structures then they'll go with an LLC.
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i created LLC in Florida , I have the 60% and my friend have rest ..
My accountant did everything for me ,
I won’t trust nobody here in HX , if you Google you will find many lawyers around and you can read the reviews in AVVO .
Happy thanksgiving 🦃🍽
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Agree LLC is the cleanest way to go.
While the S Corp has merits it can be costly to unwind or sell.
Definitely establish business goals, compensation, profit sharing and definitely ownership and how buying out interest works, timing or frequency of acquiring interest and maybe have some sort of a time limit.
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Good for you OP. Ur smart enough to tap into the free resources here.
Wishing u the best.
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Scorps need to take payroll...makes llc's a little easier to handle
don't try and incorp in nevada to get out of the calif. min tax...if you are making your business here in california...they will hunt you down
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S Corp doesn't allow medical deductions, so if you get the Rona and die?
No tax deduction for you!
Course, seeing as you're dead, taxes may not be that important to you.
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“I won’t trust nobody here in HX , if you Google...”
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KaiserSoceI was taking about lawyers here in HX....
Of course you can find good corporate lawyers in AVVO ..
why are you laughing about 🙄🙄🙄🙄 happy thanksgiving funny guy !!!
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Find it outside... this site is not for lawyers to pm you. Not everyone is good and find the right one for what you need.
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If you can't find a lawyer to screw you on this site
Then WTF good is this place?
Actually, I'm not a lawyer but there's several of you I'd like to screw!
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Thanks everyone, i was kind of just looking for the right direction to go in and I think I got a lot of good tips. Appreciate the other women looking out too  I’m new to blogging so idk how to respond to each question but definitely appreciate the advice and will look into contacting somebody and making a business plan!
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I feel so used
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Did you get a tip at least?
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GoBallsDeep Hope su can screw you right now 😂😂😂
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worldclassYes, 😱
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worldclassYou can be a lawyer and I met so many lawyers in this site but they are just for fun and good sex! . Nobody say you are can’t be a lawyer or a judge or whatever ...... But no everyone is a good person here ...
Happy thanksgiving 🍁🦃🍽
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Legal zoom.com enough said
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there are lots of considerations she was asking about...it wasn't just to go get it done cheaply at legal zoom...go do what at LegalZoom btw?
lockdown that operating agreement or don't do it at all...it will end badly...you will get fucked brutally if this isn't done...sadness will hit you very hard that a FRIEND is fucking you...seen it many many times
lots of good posts...follow a few of them a bit
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If you can't get fucked by your friends
Who can you get fucked by?
I've re-read Victoria's post several times and still have no clue what it means
But, I like her tits thus will give her the benefit of the doubt
The tits on the rest of you?
Not so much......
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islandtalent hit many great points I just want to emphasize the importance of documenting and communicating...
I'm definitely not a lawyer and with out knowing much about the company you are forming my main advise would be to document EVERYTHING!!
The accountant in me wants to say start a business account, makes sure you have 3x the capital, yadayaddda..but honestly making sure EVERYTHING is documented is most important, commutation is also key especially in a partnership.
I have worked for many types of business and 9x out of ten the issues that were raised usually cam from the lack of documentation or the ability to communicate.
I can't tell you how many times I have had to double as a mediator during upper management meetings.
If you are feeling under appreciated, first cope with the fact that you may feel this way for a while (most businesses owners do) then make sure to communicate your feelings!! But without the expectation of that feeling going away... all part of the process😁
Good luck!!!💕
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nice post ssl
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Hi, I'm business & intellectual property attorney.
Send me your info & we can discuss.
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Here's my experience when going into business with what are, at the time, friends.
Been screwed over by "friends" 3 times - 1 time (bar/restaurant) because we trusted one of the partners, another was when the company started making money and the friendship fell apart over how to disburse the profits and once when one of the other partners didn't put the effort needed and to which they had committed into the work.
None are "friends" with each other anymore and all of the businesses subsequently failed.
I started my own business after that and have been rather successful for the last 20+ years...although it was a challenge in the beginning.
Suggestions...
1. As everyone strongly recommends - document the goals. controls, commitments, and expectations in very clear and unambiguous language.
2. Have an experienced, unbiased, and objective "board" for the organization with a member that can advise how the business can best succeed AND (if only 2 partners) can break a tie if the partners disagree.
Remember ...friendship (and relationships) nearly always seem to come apart when things are rough and times are hard or when it comes to sharing profits.
Sorry if this comes off as negative. Just be VERY careful and go into your venture with your eyes wide open...please
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I’m not a lawyer but I play one on TV....
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There is lots of good general info on this post. My biggest suggestion is to read the pros and cons and pitfalls of going into business with someone else. Once you've truly decided to go forward to not go it alone. Legalzoom is a great document prep service but if you don't know the reasons behind the questions and don't select the proper entity form and answer the other questions properly you get garbage in and garbage out.
Conclusion, spend the money to have a real lawyer draft and file your documents. We've all heard the phrase a lawyer who represents himself has a fool for a client.
If you cannot afford a lawyer to do this ultra important set up you probably don't have enough money to go into business and are looking for trouble down the road.
Good luck to you in your endeavors.
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