How to Build LLC Partnerships
Having a partner takes a lot of the worry and stress out of starting a business. Even a business with a long record of success can benefit from bringing on a partner to ease the strain for the Chief Executive Officer. As good as it can be, it is very important to do it right to avoid disillusionment, fights and even legal battles. When you start a Limited Liability Company (LLC), take the time to go through all the steps and make sure you are well-protected.
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Instructions
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Evaluate the advantages of a partnership. The first rule of any business is not to rush in. Make sure it makes sense to have partners and talk to your lawyer about all of the options and what having a Limited Liability Partnership involves so you are aware of what rights each owner has and who is in control.
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Talk to your partner(s) and make sure that everyone is on the same page with their vision for the future of the company. Put a business plan in writing, not only for financial purposes, but to have a written agreement of how the partnership sees the progress of the company over a several-year period.
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Put everything in writing. Make up a contract that details exactly what each partner should expect and what each partner is expected to do so there are no misunderstandings.
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Do not sell or give away controlling interest. Divide the partnership up so that you maintain the majority interest. Even if the split is as close as 49/51, you still have two percent more clout in a decision- making situation. Nobody likes to think about it, but it is important to include an outline of what happens when one partner dies. Consider, too, if the shares can be inherited or if heirs must accept a buy-out option.
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Use a lawyer to be sure that the contract is valid and will hold up in court. A lawyer will also be able to guide you toward making the right stipulations regarding division of money, property and rights. A lawyer will also make sure your contract and LLC are in compliance with the laws of the state you reside and do business in.
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Make sure the contract has a fair and equitable way to split the business so one partner can get out if they need to. Exit strategies include buy-out options or even stipulations on the sale of one partner's share to someone outside the company.
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Evaluate the individual strengths and abilities of each member of the partnership and make sure their talents are put to the best use. Have definite roles for each individual with an active role in the business. Have monthly partner meetings to discuss the progress of the business and make sure everyone is happy with the way things are going. Allow each partner to express their feelings, both good and bad, and work through any problems before they get out of hand.
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References
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