New business venture with verbal agreement between 2

[beaterrr]

Jurisdiction

Michigan

A friend and I have decided to partner in a new business venture. Things are moving fast and in the excitement of it all, I don't want our 50/50 split verbal agreement to get lost and forgotten. How can I
make this agreement more legally binding? I should also mention that my partner is an older gentleman who's dead set on our entity being an LLC. Any advice would be greatly appreciated.

Business type: C.A.D. services to consulting engineers

 

[army judge]

A friend and I have decided to partner in a new business venture. Things are moving fast and in the excitement of it all, I don't want our 50/50 split verbal agreement to get lost and forgotten. How can I
make this agreement more legally binding? I should also mention that my partner is an older gentleman who's dead set on our entity being an LLC. Any advice would be greatly appreciated.

Business type: C.A.D. services to consulting engineers

Why not suggest to the gentleman that to be fair to both of you, so that everything is on the up and up, both of you meet with a lawyer.

You inform the lawyer how you wish to legally organize your business as a LLC, and ask how much that would cost.

Or, you can do yourselves it online for much less:
.
.
.
.
How to Start an LLC in Michigan
.
.
.
.
Register for Your Incorporation
.
.
.
.
Once you've created the document, before you file, you could have a local lawyer review it.

Or, file it yourselves, for less than a couple hundred bucks.

 

[adjusterjack]

A friend and I have decided to partner in a new business venture. Things are moving fast and in the excitement of it all, I don't want our 50/50 split verbal agreement to get lost and forgotten.

I'll be blunt and you won't like it. Too bad. Deal with it.

I hope to heck you weren't stupid enough to put up any money on this verbal agreement.

Hardly a day goes by when I don't read about these verbal business deals ("I trusted") where the deal goes up in smoke and the smarter partner gets all the money and the dumber partner comes here asking "what are my rights?"

How can I make this agreement more legally binding?

You hire yourself a lawyer who will examine your business deal and create the written agreements to present to your partner.

I should also mention that my partner is an older gentleman who's dead set on our entity being an LLC. Any advice would be greatly appreciated.

Here's the advice: Don't spend another nickel or another minute on this business without the advice of an attorney that you pay to protect YOUR interests.

If you want to try the two of you sitting down with ONE attorney, that could work if you both agree on EVERYTHING down to the last crossed T and dotted I. But it won't work as soon as one of you wants something the other one doesn't. Then you'll need your own lawyer.

 

[beaterrr]

Thank you guys for you insight and quick replies! I had to take a moment before responding due to my overwhelming anger I felt after reading adjusterjack's comments (kidding). No money has exchanged hands, as a matter of fact my partner has spent all money so far. My 1st actual investment will be paying for LLC registration. Based on the info you guys gave me, I did a little research and came up with this. Seems as though any one of the documents bellow could be used to outline the language needed to protect my interest:

Limited Liability Company Operating Agreement, LLC Bylaws, LLC Operations Agreement, LLC Setup Agreement.

Am I on the right path? I'm thinking of going ahead and registering the LLC and the meeting with an attorney to iron out the details of our agreement within the next couple of weeks. Thoughts?

 

[army judge]

Thank you guys for you insight and quick replies! I had to take a moment before responding due to my overwhelming anger I felt after reading adjusterjack's comments (kidding). No money has exchanged hands, as a matter of fact my partner has spent all money so far. My 1st actual investment will be paying for LLC registration. Based on the info you guys gave me, I did a little research and came up with this. Seems as though any one of the documents bellow could be used to outline the language needed to protect my interest:

Limited Liability Company Operating Agreement, LLC Bylaws, LLC Operations Agreement, LLC Setup Agreement.

Am I on the right path? I'm thinking of going ahead and registering the LLC and the meeting with an attorney to iron out the details of our agreement within the next couple of weeks. Thoughts?

Check out those websites I gave you.
Then find at least two more on your own.

Take your time, learn al you can, and draw up a couple of rough drafts.

Give the material to your partner to review.

Schedule a meeting between you two to discuss your concerns and come to an agreement.

Once you have crafted the "golden" LLC, schedule an appointment to discuss it with a lawyer.

Both of you guys should be present.

You appear to be operating without strife, and you have trust.

So, take 4-6 weeks to get before that lawyer.

Good luck to you guys.

 

[adjusterjack]

No money has exchanged hands, as a matter of fact my partner has spent all money so far.

Good for you. Dodged a bullet right there.

Seems as though any one of the documents bellow could be used to outline the language needed to protect my interest:

Limited Liability Company Operating Agreement, LLC Bylaws, LLC Operations Agreement, LLC Setup Agreement.

Am I on the right path?

Yes. A comprehensive operating agreement is the way to go.

I'm thinking of going ahead and registering the LLC and the meeting with an attorney to iron out the details of our agreement within the next couple of weeks. Thoughts?

Don't put the cart before the horse.

Step 1 - Lawyer
Step 2 - Draft a business plan and operating agreement and get tentative agreement by your associate.
Step 3 - Find, determine the cost of, and qualify for PROFESSIONAL LIABILITY INSURANCE. You are entering in a field that poses tremendous risk of injury and/or damage to others if your services contribute errors to anything the engineers do. And lest you think the odds are in your favor (trust me, they aren't), the cost of defending a lawsuit (even if absolved) could wreck your financial future for many, many years to come.
Step 4 - Consult a tax pro so you can both learn how to keep the appropriate records.
Step 5 - After you lay all this out for your associate, then both of you sign the operating agreement (contract).
Step 3 -THEN file the LLC. If you fill the LLC first, and your associate balks on committing to the comprehensive agreement, you'll have wasted your money.