S-corp partnering with an individual

britterbritter subscriber Posts: 6
edited July 2008 in Business Planning
Hello.  I hope everyone is doing great.  I have an s-corp that is an umbrella corporation for all of my business ideas/ventures.  I have a product that has been put together with a friend and myself and we wish to partner for this business.  I would like to have him partner with the corporation so that we are both protected under the s-corporation`s status and to use the name/build credibility for my corporation .  How would  I go about doing this, or is there a better way?

Comments

  • DeenaEsqDeenaEsq subscriber Posts: 0
    Ok.  First, what you`re talking about is confusing.  You want him to be in a partnership with the S-Corporation or you want him to have stock in the S-Corporation for this project?  I think what you`re asking is if there is a way to protect both of you.  Is that correct?
     
    Deena
    _____________________________________________________________________
     
    Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post.  No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation.  Any advice given here is not intended to create an attorney-client relationship in any way.
     
     
  • britterbritter subscriber Posts: 6
    Thank you for your reply.
    I want him to be an equal partner in this project but not have any other share of my s-corporation. And yes, at the same time protecting both of us
  • DeenaEsqDeenaEsq subscriber Posts: 0
    This answer`s going to take two parts.  The first part is that I`m confused about your use of the word "umbrella" as to your main company.  Are you trying to say that you file DBAs for each of your ventures using the main S-Corp as the company or do you actually file separate corporate paperwork for each one?  Technically, only the latter is an "umbrella" corporation.
    That being said, the short answer is that you can`t do it the way that you`re proposing.  The only way to protect your friend inside the S-Corp is to make him a shareholder and officer and get a D&O insurance policy.  Not your best solution...
    The best solution, IMO, in this situation is to create an LLC (or another S-Corp) where the ownership interest is split 50/50 between your friend and the S-Corp that you currently have. That way you both have liability coverage and ownership interest.  Make sense?
    As a caveat, you REALLY need to make sure that you make the agreement between the two of you (membership agreement or shareholders` agreement) specifically outlines each of your duties, functions, liabilities, etc.  Don`t skimp here...  More friendships have been ruined by not planning this stuff out at the very beginning....
     
    Let me know if you have other questions.
     
    Deena
    _________________________________________________________________
     
    Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post.  No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation.  Any advice given here is not intended to create an attorney-client relationship in any way.
     
     
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