Business Partnership Agreements

A silent partnership would be best for you. You could make all of the decisions regarding the business and all that your partner contributes is the investment. You have to be really careful about partnerships, they can be really painful when you don't agree.

My situation is very simular to yours... I had the 'know how' and I found someone who was willing to put up the financial backing to support it. We decided to create an S-Corporation in order to take full advantage of taxation as well as to create a simple share holder structure. As far as investment, my partner put in about $20,000.00 to get the company off the ground... which was basically a business loan from him to the corporation. I know our situation is different than yours is but so far this business model has worked very well for us. Because I work as an employee of the corporation, I take a salary which we use a payroll service for. My partner has the benefit of company losses in which he can use as a deduction or company profits in which he gets as a disbersment at the end of the year. I, as of this week, am going to start the process of buying my partners shares so that I am 100% owner of the company. The most important document we had going into this was the initial proposal that outlined our interest to create the corporation for mutual benefit and exactly the duties expected of each shareholder. I will hopefully have all of this buttoned up and completed by mid month and I would be happy to follow-up with you to let you know how well it worked for me.

I have been there and done that and I promise you I will never dso it again. My best friend of 30 years had the money, while I had the skills and knowledge. We formed an LLC and what we done was, I became sole owner and he was a share holder, so to say. He financed everything, while I done all the work and made all the money. The agreement was, I would pay him back with interest everything he put out, plus pay him a percentage on all monthly gross income I brought in. Seemed fair to all, and agreed. Then he realized how much money I was bringing in and he wanted half of it all. Forget the agreement he said. Now, his greediness has costed me a 30 year friendship and a dream business, all because he had the money to start it all. PLEASE be very careful in what you do.

I am not a lawyer. If you have and own the LLC. why give away anything? If the investment is strictly a monetary cash thing, than keep it at that. The money man simply wants assurance his/her investment is safe. A standard loan agreement would be in your best interest in this situation. Keep it simple.