Partnership - 2 separate LLCs?

[BlueMonday]

Hello all,

I'm about to go into business with a friend of mine who has a solid understanding of the operations side of a niche business. There are a few red flags but this would be a total nonstarter without him given my lack of first hand knowledge. I'm trying to think of a way that we can be compliant on the paperwork side without taking on too much risk should either of us become a pain in the a$$ in the future.

I'm thinking about filing two separate LLCs, one for him one for me. Just something to get us started. I know a multi-member LLC would be ideal, but again, red flags. Nothing crazy like theft or anything. Mostly administrative concerns.

So I guess my question is, could two separate LLCs work? I know we'll have to just trust each other regarding splitting assets should we eventually part ways, but I'm not too concerned with that. He's trustworthy, just not the most reliable guy when it comes to paperwork. I'd rather we handle all of that on our own.


Thanks in advance!

 

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[Bounce Back]

You haven't even started and guy has red flags - seems you know the answer haha.

 

[Kevin88660]

Hello all,

I'm about to go into business with a friend of mine who has a solid understanding of the operations side of a niche business. There are a few red flags but this would be a total nonstarter without him given my lack of first hand knowledge. I'm trying to think of a way that we can be compliant on the paperwork side without taking on too much risk should either of us become a pain in the a$$ in the future.

I'm thinking about filing two separate LLCs, one for him one for me. Just something to get us started. I know a multi-member LLC would be ideal, but again, red flags. Nothing crazy like theft or anything. Mostly administrative concerns.

So I guess my question is, could two separate LLCs work? I know we'll have to just trust each other regarding splitting assets should we eventually part ways, but I'm not too concerned with that. He's trustworthy, just not the most reliable guy when it comes to paperwork. I'd rather we handle all of that on our own.


Thanks in advance!

I think part of growth is learning to deal with players who are not tier-one. They have some flaws here and there.

Because we are not tier-one players also, and superstar players don’t play with us. They pair with other superstars.

This leaves you two options: doing everything yourself or finding people with strengths but flaws too and learn to work with them and grow together.

 

[Johnny boy]

Always just sit down with people and say “hey man…so…what are your goals?” And people will dump what’s in their head out on the table. You will know what he wants and then you can work on getting him what he wants.

That’s what a good business man does. That’s what a good salesman does. That’s what a negotiator does. You get people what they want.

“I just wanna make a good income and retire early”

“PERFECT! Let’s have you do the work you’re good at, and we will do a revenue split where you’re paid x% of the revenue up to 300k a year. And then we can renegotiate in a few years or so? Would that work? That way it’s simple, there’s no BS ownership stuff like stocks and stuff, it’s just simple and you get paid”

“Okay perfect thanks pal”

 

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[BlueMonday]

Always just sit down with people and say “hey man…so…what are your goals?” And people will dump what’s in their head out on the table. You will know what he wants and then you can work on getting him what he wants.

That’s what a good business man does. That’s what a good salesman does. That’s what a negotiator does. You get people what they want.

“I just wanna make a good income and retire early”

“PERFECT! Let’s have you do the work you’re good at, and we will do a revenue split where you’re paid x% of the revenue up to 300k a year. And then we can renegotiate in a few years or so? Would that work? That way it’s simple, there’s no BS ownership stuff like stocks and stuff, it’s just simple and you get paid”

“Okay perfect thanks pal”

Thanks for chiming in man! Your Lawncare journey thread was one of the reasons I decided to finally stop lurking and register for the forum.

Good point about the high level convo - I'll definitely make a note to address those issues and take that approach when it's time to chat about the big picture with him.

I guess I should rephrase my question a bit, because I agree with your approach I and with the other replies too (thanks fellas, I need to learn how to reply directly to everyone in one message).

We're definitely moving forward, but I need to figure out the best way to structure this as far as the paperwork is concerned.

Maybe we could pull this off as two separate LLCs in the beginning, and then perhaps sign a JVA later if things start to get traction.

 

[Johnny boy]

Thanks for chiming in man! Your Lawncare journey thread was one of the reasons I decided to finally stop lurking and register for the forum.

Good point about the high level convo - I'll definitely make a note to address those issues and take that approach when it's time to chat about the big picture with him.

I guess I should rephrase my question a bit, because I agree with your approach I and with the other replies too (thanks fellas, I need to learn how to reply directly to everyone in one message).

We're definitely moving forward, but I need to figure out the best way to structure this as far as the paperwork is concerned.

Maybe we could pull this off as two separate LLCs in the beginning, and then perhaps sign a JVA later if things start to get traction.

Does he even want to own a company or does he just want to make money?

 

[MitchC]

I think what you want to do is actually have 3 LLCs

You have an LLC each and those LLCs own 50% each of the partnership LLC

But I also have no clue what I’m talking about and no idea why you even want to go into business with this guy

 

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[BlueMonday]

Does he even want to own a company or does he just want to make money?

Ah, I should have started there. Yes, he wants to own half of the company.

I'm at a bit of a stalemate because there's no way I could even get into the business given that I have zero experience in the industry. He knows a ton about the operations side, but not much when it comes to sales/marketing/admin. That's where most of my experience is.

He is trustworthy, I know that. He's just not the most organized when it comes to administrative things, personal taxes, car registration, etc. That gives me reservations about sharing liability, not to mention accounts.

I was thinking that if we both go into it with separate LLCs we could split the jobs and expenses in the beginning, but then we'd have a huge headache later on if it scales.

Who knows, I'm probably overcomplicating things.

 

[Kevin88660]

Ah, I should have started there. Yes, he wants to own half of the company.

I'm at a bit of a stalemate because there's no way I could even get into the business given that I have zero experience in the industry. He knows a ton about the operations side, but not much when it comes to sales/marketing/admin. That's where most of my experience is.

He is trustworthy, I know that. He's just not the most organized when it comes to administrative things, personal taxes, car registration, etc. That gives me reservations about sharing liability, not to mention accounts.

I was thinking that if we both go into it with separate LLCs we could split the jobs and expenses in the beginning, but then we'd have a huge headache later on if it scales.

Who knows, I'm probably overcomplicating things.

Come to think of it, if you want to tap his resources and industry experience it’s fair that you play a part in helping him to clean his mess.

Wanting benefits only without duties and obligation is more of a “red flag” sign to me TBH.

What you are literally doing now it’s you want to tap into his resources but if he crash and burn due to poor administration practice that’s not your problem. It’s not a good attitude for your own long term growth.

The more you demonstrate to be a giver, the more you attract people who gonna bet their resources on you.

 

[BlueMonday]

Come to think of it, if you want to tap his resources and industry experience it’s fair that you play a part in helping him to clean his mess.

Wanting benefits only without duties and obligation is more of a “red flag” sign to me TBH.

What you are literally doing now it’s you want to tap into his resources but if he crash and burn due to poor administration practice that’s not your problem. It’s not a good attitude for your own long term growth.

The more you demonstrate to be a giver, the more you attract people who gonna bet their resources on you

Edit:the formatting is all jacked up since I'm replying on a tiny screen and lagged out mid response.

Come to think of it, if you want to tap his resources and industry experience it’s fair that you play a part in helping him to clean his mess.

Wanting benefits only without duties and obligation is more of a “red flag” sign to me TBH.

What you are literally doing now it’s you want to tap into his resources but if he crash and burn due to poor administration practice that’s not your problem. It’s not a good attitude for your own long term growth.

The more you demonstrate to be a giver, the more you attract people who gonna bet their resources on you.

The first and last paragraphs I agree with 100%. The others are my fault as I skipped a lot of details to save people time while reading my initial post.


We'll match each other's effort from day one. I'll be learning the operations side and getting the physical labor done with him every day. Hopefully we'll scale to the point where we can hire and train but for now that's the plan.

 

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