Thinking about going into business with a friend or family member? The first thing you need to do is establish the terms of your relationship.
First, determine who will do what. Is the relationship equal in terms of contributions? Is it equal in terms of who will do the work? Who will make the business decisions? If both partners make decisions, who will break a "tie" if there is a stalemate?
If you will form a LLC for your business, you need to have in place an Operating Agreement. That is the document where you will write down all of these answers and establish all the basics of your relationship. A business relationship is similar to a marriage. In the beginning, everyone is starry eyed and enthusiastic. Over time, resentments may build and damage the relationship. Similar to a prenup, the Operating Agreement will dictate what happens if someone wants out.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way.