Many people say that two (or more) minds are greater than one, and it is true that starting a business with one or more partners can be beneficial. Owners can all bounce ideas off each other, bring different strengths to the table, and provide additional resources to get the business off the ground.
However, there are also legal concerns and considerations when it comes to starting a business with someone else.
Business Entity
You need to decide what business entity you want to form. This might include:
- General partnership
- Limited liability company (LLC)
- Limited liability partnership (LLP) for certain professional services
- Corporation
A general partnership is the simplest to form, as there is no official registration required with the California Secretary of State. Other entities require official formation and filings, but they provide other benefits. Discuss this matter with your business attorney.
Operating Agreement
Even if one is not required by law, having an operating agreement is essential with more than one owner. This agreement will outline the roles and responsibilities of each partner, how to divide profits, and how to resolve disputes. This agreement sets the stage for a successful partnership in many situations.
Face Disputes Up Front
There will come a time when partners disagree, and it is important to resolve these conflicts head-on. This can involve enlisting an attorney to help negotiate between owners, engaging in mediation, or even initiating litigation in some situations. The more effectively and efficiently you resolve partner disputes, the more you protect the business.
Speak with a San Francisco Startup Counseling Attorney
At Primum Law Group, we help owners of all types of companies start their businesses to best set them up for success. Contact us online or call 415.293.8042 to learn more about how a San Francisco startup lawyer can assist you and your partners.