How do I form a quick and easy business partnership with a friend?
June 22, 2010 1:22 PM   Subscribe

How do I create a business partnership with a friend that both best protects our interests but also is quick and easy, for a project we're not sure is going to last (hence, we don't want to put a lot of effort into the planning - yet.)

So a friend and I want to try our hands at working to create and sell some website templates through a paid template site as a way of making extra cash. At the moment we are just getting our feet wet to see if it's worth investing out time. I've known her for a long time and I trust her, but I'm also aware that friends and money don't always mix well. So I'm looking for advice on how to ensure that neither one of us has the chance to screw the other. But I also don't want to spend a lot of time creating a business entity for something that we are just dabbling in and that may not work out. Is there a solution, both legal and how we would handle working together and managing our account? As for the details, she plans on designing and I plan on developing with a 50/50 split. Payment, if we get that far, is to a paypal account or by check if over a certain amount.

If we has this out in writing and have shared access to the template sites account, is that enough? If we sort it out in writing, can we worry about the legalese later? Would a joint checking account for payment via paypal make sense, and if so, do we need to create a formal business entity?
posted by [insert clever name here] to Work & Money (6 answers total)
Friendships have been destroyed over far less, and no web venture (or any other business) will succeed if you're not serious and professional, all of which is the long way of saying what lots of others will tell you below: spend a few hundred bucks on a lawyer and do it right from the start.
posted by fourcheesemac at 1:25 PM on June 22, 2010 [1 favorite]

And without realizing it, you may be subject to state partnership laws by being in business together. Get a lawyer.
posted by Sukey Says at 1:40 PM on June 22, 2010

Making sure that both of your interests are protected and ensuring that you're complying with the laws for businesses in your jurisdiction is not a "minor detail" you can hash out later.

To wit, your jurisdiction almost certainly has a default business organization that you'll create, whether you want to or not (and whether you know it or not), by going into business with this person. If, later on, you (or she) want to change the terms, it will likely require the other person's approval. It doesn't take a lot of dreaming to imagine a situation where a person wouldn't want to change the terms because the default was far better for them.

That's all to say nothing of various laws and regulations you could be unwittingly subjected to.

Go talk to a lawyer.

If you're not willing to put a few hundred bucks into solving all of those problems, you likely aren't serious about the business venture to begin with.
posted by toomuchpete at 2:23 PM on June 22, 2010

I always recommend against partnerships...not worth the hassle and drama should things with the business head south.
posted by MsKim at 3:04 PM on June 22, 2010

Are you building the paid template site as well, or are you submitting templates to the site.

If it's just making the templates, why don't you just test out 3 or 4 that you create together with the 50/50 split. Then, if it seems to be going in a direction you want it to, think about writing a plan.

The test run will clarify your needs, show you things you hadn't yet thought about, show if you can work together, if your designs sell, if this is fun and you actually want to do it.

No need to put the cart before the horse if you aren't even sure this is something you want to do. Don't make it harder than it needs to be.
posted by Vaike at 3:04 PM on June 22, 2010

Vaike has it. I think we need to start out set a small goal, and if the goal is reached, re-evaluate how we want to proceed.
posted by [insert clever name here] at 7:50 AM on June 23, 2010

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