My associate and I are starting a business. We offer 1on1 consulting, but also do paid public speaking engagements. How should we form our Business?
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My associate and I are starting a business. We offer 1on1 consulting, but also do paid public speaking engagements. How should we form our Business?
My associate and I are consultants offering 1 on 1 services to the same market, so we partnered up and want to start a business. We work seperately when providing 1on1 services, but together when providing workshops etc. In addition to the 1on1, we offer services to groups, motivational speaking sessions, seminars and workshops. Our services can be categorized as professional development. We both want equal say so in the business. Should we go with an LLC, be seperate Sole Proprietors or Incorporate??
Asked on June 19, 2009 under Business Law, North Carolina
Answers:
J.V., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
Although each option provides different benefits and disadvantages they are mainly dealing with tax implications. Although if you want to be partners a sole proprietorship is a type of business entity which there is only one owner and he has the final word taking all decisions by himself. All debts of the business are debts of the owner and must pay from his personal possessions. This means that the owner has unlimited liability. It is a "sole" proprietorship in the sense that the owner has no partners so this will not work for you
At this point the choice depends on your end goal. With each option you can set forth the division of ownership within the operating agreement. You can explain it is 50/50 set forth what each party can or cannot do how profits are divided etc. The main issue is whether you want an LLC which is basically a company in which debts and profits flow directly to the shareholders or if you want to incorporate which allows the company to absorb some of those. There are tax issues with both and you need to sit down with an account and decide what will best serve you both.
Once you have a better idea of the tax implications I advise contacting an attorney to handle the operating agreement and help set forth ownership rights, profits, losses, liability etc. Good luck
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