New company

July 10, 2006 1:13 PM

New company....what do I need to learn?

I'm thinking to join an acquaintance to open a "blind & drapery" shop. For now, I'll put in 35% and he'll put in the rest. After I sold my house (don't know how long), I'll be able to put in 50%.

At first, he suggested to open a LLC and have one trustee to handle the business. He now wanted to have a "Trust" rather than a LLC. I don't know much 'bout those two. All I want to see is two signatures on every check written.

My questions are:
1. LLC or Trust or is anything out there more appropriate?
2. What should I do to reflect my investment % increase once the company in place?
3. What should I do to protect myself from being taken advantage and from the legal stand point?
4. Should I get an attorney?

Thanks very much.

posted by anonymous to law & government (11 comments total)

Ugh. Move #4 to #1. If you don't know the difference between an LLC and a Trust and how shares of a corporation work, you need one.
posted by SpecialK at 1:22 PM on July 10, 2006

#1 - see #4
#2 - see #4
#3 - see #4
#4 - Yes
posted by kcm at 1:26 PM on July 10, 2006

Talk to an attorney before taking even one more step forward with this.

This attorney should be someone who has experience in this field.

This attorney should be advising you and only you - not you and your friend, not you and also the corporation.

Then find a community resource that will help you understand "business basics" - don't rely on your friend's advice or information, and make sure you 110% understand what you are doing before you do it. If you are uncomfortable, stop and do the research that you need to do.

(I am a lawyer, but I am not your lawyer.)
posted by KAS at 1:39 PM on July 10, 2006

Several people have recommended SCORE to me after I expressed some interest in starting a business. They have some seminars, quite inexpensive, and offer free counseling from seasoned professionals. Everyone I've worked with there was very friendly, open to questions, etc. You might want to look up your local chapter. It helps that they have a large presence here (Orlando), though.

Also, #4.
posted by kableh at 1:43 PM on July 10, 2006

Oh, and don't think you can 'wing' it. A friend didn't consult an attorney and then wilfully neglected to take the advice of an accountant when starting a business and ended up in debt to his eyeballs... the kind of debt that you never, ever get out of.
posted by SpecialK at 1:44 PM on July 10, 2006

Get an attorney.

Outside of "two names on a check" there's a ton of different reasons to go with different types of corporations. There may also be local small business groups which can help explain the differences between these issues but if a contract is going to be signed you must put it in front of an attorney first.

Check your state bar office for attorney recommendations.
posted by bitdamaged at 1:48 PM on July 10, 2006

The idea of a Trust is this scenario sounds odd. Make sure you understand what your partner thinks a Trust will accomplish and get your lawyer to explain the best way for you and your partners to meet those objectives without creating tax problems or too much inflexiblity.
posted by mullacc at 1:59 PM on July 10, 2006

Get a book on LLCs, trusts, and S-corps. Study it then see a recommended lawyer. You can start at the wikipedia.
posted by skallas at 2:09 PM on July 10, 2006

FWIW the "How to Form a LLC" link at the end of that Wikipedia article sucks.

I'd google for info on your specific state. I've found a couple VERY good websites with Arizona info.
posted by jimmy0x52 at 3:42 PM on July 10, 2006

I highly recommend that you find a short course in small business management, and do that ASAP. Most adult education colleges have something along this line.

Also, what everyone else said.
posted by Lucie at 5:06 PM on July 10, 2006

I tend to be a very DIY person and at one time, probably would have said "Wing it! Read Wikipedia and use Google, I'm sure it'll be fine." But honestly, a little investment in an attorney now could save you majorly down the line.

I work for a business attorney and he advises people on exactly these decisions all the time. When you hire someone who's done these same filings and paperwork a hundred times, you can really benefit from their experience; a good lawyer should know more about LLCs, trusts, corporate and partner agreements, etc., than you ever would. Use 'em!
posted by SuperNova at 7:58 PM on July 10, 2006