Business Partnerships Start With an Attorney
Any time you get into business where it’s more than just you, the very first thing you need to do is go talk to your attorney. Any time you have this arrangement where there is some joint separation and division of financial responsibilities and work responsibilities, you’re going to have stress, you’re going to have frustration, and as that stress and frustration mounts, you really need a solid common understanding of who’s responsible for what, who gets what benefits, who bears what costs. And if you don’t have that set up from the beginning with your business, you can cause some serious problems and you can suffer some serious problems.
I’ve seen partnerships that had an LLC registered where one of the partners just stopped showing up for work.
And it just so happened that that partner was also the one who had fronted the use of his high-credit-limit credit card. And so my client, who was the other partner that was actually doing the day-to-day work, was almost completely reliant on the other partner’s credit limit in order to cover the day-to-day, operational costs of this business.
Well, as soon as the other partner stops showing up for work, there also stopped being communication between the two. And one day that credit limit got shut down, and there was no way for my client, the partner that was still showing up for work every day, to be able to purchase the supplies they needed for their business, to pay the utility bills, to keep their lights on.
And all of a sudden the business was in jeopardy. And when I asked my client, “What sort of arrangement did you have from the beginning?” Of course, there wasn’t one. They had set this up on their own. They had never gone to an attorney. They’d never worked with a lawyer.
So it’s critical that, if you’re going to do business with somebody, before you go register an LLC, talk to an attorney and let the attorney handle that for you.
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