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Forming an LLC with partners or by myself?

by s1d
9 replies
If 3 friends, whom are working in this business each on their own accord, decide to form a business together, what option would you recommend:

- Form 1 LLC as an umbrella and use the business name, then join traffic sources & sales together, invest even percentage into traffic buys and distrobute profits evenly.

- Form 3 seperate LLC's, 1 for each member, and continue to work together, each with their own traffic & sales.

Opinions?
#forming #llc #partners
  • Profile picture of the author Ryan Martin
    Three friends working together is already a pretty bad start. Those don't typically end well - just my opinion.

    You can be liable for what they do (or don't do for that matter) and I've heard of partners clearing out all the money and taking off or buying ridiculous things with business money. I've also been royally screwed by a business partner.

    If you are that set on it, an LLP with strict terms (written up by an attorney) is your best bet in my opinion.
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  • Profile picture of the author quikaz
    Together as 1 LLC is by far the easiest but make sure you have a written agreement with the responsibilities etc of each person, you might not think you need it now but it helps so much when there is a clear outline of everyone's role and responsibility and of course equity%.
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  • Profile picture of the author asiriusthoth
    I agree with quikaz; a Multiple member managed LLC is probably the best way to go (In my non-legal opinion). Just make sure to write out the agreement, certifications, and percentage break down for the company. LLC's can be single entities or they can have 1,000's of employees. They are very easy to create, and flexible.

    Just be careful about going from a multiple member managed LLC to a single member managed LLC. There can be some tax/legal ramifications that you might not want to go down. A lot of CPA's would rather you have a multiple member managed LLC with 100% share and 0% share than going to just a single managed LLC entity.

    I had an old business partner of mine decide to leave one of our multiple member managed LLC's a few years back. Since we left on good terms, it was best (for tax reasons) to keep it as a multiple member managed LLC but I would own 100% of the company and he would own 0%.
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  • Profile picture of the author Gordon P
    Definitely Option 2. 3 friends and business rarely go hand in hand. I've been through this before and it ended bad. It's better to setup each an own LLC. From there on you can still cooperate together.
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    • Profile picture of the author s1d
      Originally Posted by Gordon P View Post

      Definitely Option 2. 3 friends and business rarely go hand in hand. I've been through this before and it ended bad. It's better to setup each an own LLC. From there on you can still cooperate together.
      This is kind of what I was pushing for - each with our own LLC and if we wanted we could create another umbrella LLC or Scorp if we wanted to collaborate on marketing campaigns.
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  • Profile picture of the author Greedy
    - Form 3 seperate LLC's, 1 for each member, and continue to work together, each with their own traffic & sales.
    For affiliate marketing, there is not reason you need 3 people under 1 LLC.

    Just do your own thing.

    All throwing your money together, give your more capital, but more headaches.

    And you don't need much capital, so if you can't earn it on your own you probably don't need to be playing around with it.
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  • Profile picture of the author Martyfl
    The only time you ever need a partner is if that partner can bring to the table expertise that you cannot buy cheaply, clients that are ready to buy or capital that you cannot borrow (or want to borrow). Otherwise, that individual has no value and you are only diluting the company.

    I also feel, like many here, that I would rather have a good friend than a partner. It is one thing if you partner or do business with someone and become friends. But the other way around creates a lot of problems. Good friends are hard to find.
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    • Profile picture of the author s1d
      Originally Posted by Martyfl View Post

      The only time you ever need a partner is if that partner can bring to the table expertise that you cannot buy cheaply, clients that are ready to buy or capital that you cannot borrow (or want to borrow). Otherwise, that individual has no value and you are only diluting the company.

      I also feel, like many here, that I would rather have a good friend than a partner. It is one thing if you partner or do business with someone and become friends. But the other way around creates a lot of problems. Good friends are hard to find.
      This is very true. Maybe I needed to hear it from you guys to resonate in my head. Thanks.
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  • Profile picture of the author wesawu
    Do you your own thing! If you need their help, pay them for their services!! Speaking from 30 years experience!
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