New Buisness partnership advice needed

[zacs]

Originally Posted by RIJIMMY

You're either a partner or an employee for tax purposes, there is no in between.....

That is not exactly true. He could be a 1099 - which is an independent contractor.

But Jimmy is right, you really do need to formalize exactly what the relationship is and go from there.

[cheferson]

First off thanks for all the advice! Lots of great suggestions ! I def want something formal , I also was thinking the 1099 as a way to claim taxes. I also do see me getting kicked to the curb ( maybe?) after she sucks my head dry . My big thing is I have some good industry contacts. I know right off the bat I could save and make her money through this contact almost immediately . I want to avoid introducing the 2 of them without something formal between her and I in place.

On another note .. SOme times life works in crazy ways...
Went into work today and got laid off.

[cheferson]

Anyone know any good lawyers down in soco/newport who specialize in business law?

[zacs]

Originally Posted by cheferson

Anyone know any good lawyers down in soco/newport who specialize in business law?

eff the lawyers. lawyers suck, are expensive, and should only be a tool of last resort. go talk to the lady and hash out the deal. If you need a lawyer to sort it out then it probably isn't going to work. Its not like you are trying to merge two agribusiness giants. Just talk to her and be honest with your concerns. There is nothing wrong with wanting to make money, and let her know up front that you just want to make sure you understand what is in this relationship for YOU.

Again, this is just my oppinion, and I'm sure many will give you other advise. So use your best judgement...

[cheferson]

I agree , But with no lawyer how would I ( greenhorn) know that are agreement was binding? ANd would be worthless paper when it comes down to it?

[JohnnyD]

Originally Posted by zacs

eff the lawyers. lawyers suck, are expensive, and should only be a tool of last resort. go talk to the lady and hash out the deal. If you need a lawyer to sort it out then it probably isn't going to work.

I'm sorry but I couldn't disagree more with the above statement. chef, the lawyer you find should make sure all your loose ends are taken care of and you are legally covered from being taken advantage of.

For example, say the business explodes quickly and becomes extremely successful within 12 months. If you're working with her under terms you two wrote up over coffee and agreed upon, what if there is a big hole that allows her to give you the boot? Worse yet, what if she gives you the boot even without any legal ground but the "contract" isn't clear enough and left "open for interpretation" by a judge?

A good lawyer should help prevent the worst-case scenarios from happening and cover your tail if they do occur.

[cheferson]

Originally Posted by JohnnyD

I'm sorry but I couldn't disagree more with the above statement. chef, the lawyer you find should make sure all your loose ends are taken care of and you are legally covered from being taken advantage of.

For example, say the business explodes quickly and becomes extremely successful within 12 months. If you're working with her under terms you two wrote up over coffee and agreed upon, what if there is a big hole that allows her to give you the boot? Worse yet, what if she gives you the boot even without any legal ground but the "contract" isn't clear enough and left "open for interpretation" by a judge?

A good lawyer should help prevent the worst-case scenarios from happening and cover your tail if they do occur.

That's exactly what I want to avoid and why I will be calling around tomorrow.

Thanks for all the advice everyone!

[MakoMike]

Originally Posted by zacs

eff the lawyers. lawyers suck, are expensive, and should only be a tool of last resort. go talk to the lady and hash out the deal. If you need a lawyer to sort it out then it probably isn't going to work. Its not like you are trying to merge two agribusiness giants. Just talk to her and be honest with your concerns. There is nothing wrong with wanting to make money, and let her know up front that you just want to make sure you understand what is in this relationship for YOU.

Again, this is just my oppinion, and I'm sure many will give you other advise. So use your best judgement...

Worst advice you could ever get. By all means talk to her and reach a mutual agreement, but then get it put in writing by a lawyer. Lots of partnerships have made it big. You're going to need some type of legal vehicle anyway, be it a partnership, LLC, sub S corp, or sub C corp, so you will also need a partnership agreement or a shareholder'
s agreement. All the Terms & Conditions can (and should be) included in that agreement. Trying to cheap it out in the short haul can be very expensive in the long haul. Putting it all in writing is to both of your advantage.

[zacs]

Originally Posted by MakoMike

Putting it all in writing is to both of your advantage.

This can be done without a lawyer. And nobody said anything about not putting it in writing. It NEEDS to be in writing.

It is so sad that everyone is so afraid of their own shadow that lawyers are called in for everything. I'm suprised you guys don't bring lawyers to the batroom to negotiate how much $hit the tiolet paper is going to wipe from your a$$.

If you are going to form a new entity that is different...you would need someone to go through the RI BS of forming any sort of corp or LLC, but is certainly doesn't sound like it is going that way.

So you are basically acting as a 1099 consultant to help her get a mushroom business off the ground. Work out the deal, write up a quick letter with your understanding of the details and then you both sign it.

jump on the opportunity before it is lost. maybe you won't end up with your own mushroom farm after a couple of years, but you will have learned everything there is about starting up larger scale production than your basement, and you will make some money. Plus you will learn processing & distribution from her. Once you have saved up, start your own thing, or try to buy a piece of her's.Then live happily ever after. In the dark.

[cheferson]

Biggest reason why I want to be cautious is because I can save her a ton of $$$. She currently gets her blocks (non organic cert) freighted from Penn to boston . She has to buy a pallets worth each time(200 blocks-too many ,getting old and getting infected with trichoderma mold from sitting)Where she drives to pick them up.The strain is of lower quality. I have a friend closer where we could just drive and pick up the blocks,same price and no $125 freight charge. ALso this strain is of a very high quality and certified organic , which is huge. We could also buy and redistribute/process the mushrooms he grows until we got going and to produce capital. He sells them very cheaply , 1/3 of what we could charge! I also have 4-5k worth of commercial cultures in addition to all the cultures i traded and cloned. I also have a ton of equipment on hand already too that I spent a ton of coin on . Not too mention the 1000's of hours of experience I have with 20+ different strains . Experience foraging for local wild mushrooms too! That's a lot to me to give , and not get a percentage of the actual mushroom business, not just profits....

If I wanted I could just talk to my friend about being a salesman for his company . Go to the markets and restaurants and undersell her , taking her out before she got started.

[JohnnyD]

Originally Posted by zacs

This can be done without a lawyer. And nobody said anything about not putting it in writing. It NEEDS to be in writing.

It is so sad that everyone is so afraid of their own shadow that lawyers are called in for everything. I'm suprised you guys don't bring lawyers to the batroom to negotiate how much $hit the tiolet paper is going to wipe from your a$$.

It's not that people are afraid of their shadow, it's that the business world is cut-throat and if you don't CYOA, you *will* get burned.

If you are going to form a new entity that is different...you would need someone to go through the RI BS of forming any sort of corp or LLC, but is certainly doesn't sound like it is going that way.

So you are basically acting as a 1099 consultant to help her get a mushroom business off the ground. Work out the deal, write up a quick letter with your understanding of the details and then you both sign it.

If he doesn't form a business entity with her and works with her in the form of an independent contractor, there are still a lot of bases to cover. If those bases are not covered appropriately, there's a possibility he works with her as an "employee at-will" and is kicked to the curb at any time without building any assets, there's a possibility that this wouldn't apply at all - I'm not an attorney, it's their job to know, not mine. My thought is: why work as an employee or contractor to help build *her* business when they can work together to build a business a joint business venture? Be the shepherd not a sheep.

zacs, I mean no disrespect but it seems like you have a whole deal of animosity towards lawyers. I was taught a $10k lesson rather early on in my business career due to not having a lawyer review our contracts to close out any holes and providing a very large job for a client and them applying a chargeback on their deposit and not paying their balance.

[RIJIMMY]

Originally Posted by zacs

That is not exactly true. He could be a 1099 - which is an independent contractor.

But Jimmy is right, you really do need to formalize exactly what the relationship is and go from there.

You're right, I was lumping contractor in as employee.