How to strcucture partnering Up - Plumbing Zone

907plumber · 03-14-2010, 09:08 PM

Well, I met up with a former Co-worker who I think would be a good business plumber. He has alot of experience and is a hard worker.

How it will probably work is that we will use his administrators license for now.

I have the truck and some investment money (about 16k). He is broke, He's been out of work for awhile.

He has most of the tools. I think all we are missing is a threader.

neither of us has any experience running a business.

Right now I need to formulate a strategy and a contract.

Naturally we both want to get paid, but we need to set aside profits as well for business expenses, future growth, what have you.

Do we do something like we each get 25% of the net profit, then deposit the remaining 50 into a bank account set up for the business?

How do you make sure the other guy doesn't go behind your back and withdraw out of the company account?

What about a exit strategy in case the partnership is not working?

I probably just need to buy a book or two huh?

Miguel · 03-14-2010, 09:36 PM

Hmmm, partnership.
One has capital, other is broke.
No business experience combined.
Both bring assets.

Would you marry this guy? Starting a partnership isn't much different.

The only difference between this kind of marraige and the conventional is that the divorces are more frequent and much messier in the business partnership.

Better off as one as principal (assumes the risks) and the other as "key employee", perhaps with better beneifts.
Two companies with a close business relationship might be better in your circumstance.

Just my 2 cents.

OldSchool · 03-14-2010, 11:14 PM

I agree with Miguel..... The guy is still out of work.... already signs of problems.. you would be better off hiring him instead....

ChrisConnor · 03-14-2010, 11:43 PM

I former employee started a similar parntership. Two years later he is back working for somebody. The "partner" with the money decided that he would make the decisions, when he really had zero business acumen. They skated along for a while, but it finally happened and they closed up.

The blame went both ways. Remeber, luck favors the prepared.

SummPlumb · 03-15-2010, 12:56 AM

I would leave it your company. Set up an S corporation with you being 100% stock holder for now. You will be the signer on the checking account. If he comes up with 16k plus assets, then you guys move forward. I have been in two previous partnerships and they go south if both parties don't bring equal pie to the table.

You can still set his salary equal to yours, but if he walks, you have only lost a friend.

Lots of negative things can happen if your equal partners right now.

1. He gets sick, you still pay him.
2. He gets in tax trouble personally, IRS comes after company assets and maybe yours.

Take your accounts (contractors, jobs) and make sure their yours in the contract. Any that he brings will stay his. Any you gain together you split if the partnership dissolves.

If he is an employee, you can give him other perks for his truck and tools. Maybe a truck allowance that pays his expenses.

Of course I also like Miguels suggestion. You both have your own companies and form a third company with you guys partnered for doing bigger jobs or another form of plumbing.

The problem with partnerships is that most partners do not act as partners. They act int the best interest of themselves. Be careful what ever you do.

A good lawyer setting this up only cost 500 bucks give or take.

niteowl · 03-15-2010, 01:15 AM

remember no buddy is going to work as hard as you do-period. so if you know this going in and are ready to accept this-example-does not show up for call on sunday night-then do the deal. i have been partners with-my brother, 1960's did not work out-with a co worker, 1980's-didnot work out-family member, 2000's, didnot work out. not many years left-i think i will finish my working career alone-as president and 100% share holder, s corp.

ToUtahNow · 03-15-2010, 01:36 AM

The best way to structure a partnership is to start by bending over and grabbing your ankles. If that does not appeal to you, don't start a partnership.

Mark

M5Plumb · 03-15-2010, 03:21 AM

Miguel, I was going to start down the same thread you did here.

An llc may be the way to go simply because the starting of a third and independent company will tie up itself and hold what ever percentage you each bring to the table. SummPlumb makes a great point too, hire a lawyer. It'll save you both so much in the long run.

Quote:

Originally Posted by Miguel

Hmmm, partnership.
One has capital, other is broke.
No business experience combined.
Both bring assets.

Would you marry this guy? Starting a partnership isn't much different.

The only difference between this kind of marraige and the conventional is that the divorces are more frequent and much messier in the business partnership.

Better off as one as principal (assumes the risks) and the other as "key employee", perhaps with better beneifts.
Two companies with a close business relationship might be better in your circumstance.

Just my 2 cents.

para1 · 03-15-2010, 10:12 AM

Don't do it.

907plumber · 03-15-2010, 11:36 AM

Well Thanks for all the responses. I talked to some freinds up here as well and I think everyone is in agreement here. No partners for me. I'll keep thinking about how else I can benefit from him, and he can benefit from me.

03-14-2010, 09:08 PM	#1
907plumber Senior Member Join Date: Mar 2010 Location: Eagle River, alaska Posts: 120 My Photos	How to strcucture partnering Up Well, I met up with a former Co-worker who I think would be a good business plumber. He has alot of experience and is a hard worker. How it will probably work is that we will use his administrators license for now. I have the truck and some investment money (about 16k). He is broke, He's been out of work for awhile. He has most of the tools. I think all we are missing is a threader. neither of us has any experience running a business. Right now I need to formulate a strategy and a contract. Naturally we both want to get paid, but we need to set aside profits as well for business expenses, future growth, what have you. Do we do something like we each get 25% of the net profit, then deposit the remaining 50 into a bank account set up for the business? How do you make sure the other guy doesn't go behind your back and withdraw out of the company account? What about a exit strategy in case the partnership is not working? I probably just need to buy a book or two huh?

03-14-2010, 09:36 PM	#2
Miguel Drained Professional Join Date: Aug 2009 Location: Sunset Country, Ontario Posts: 709 My Photos	Hmmm, partnership. One has capital, other is broke. No business experience combined. Both bring assets. Would you marry this guy? Starting a partnership isn't much different. The only difference between this kind of marraige and the conventional is that the divorces are more frequent and much messier in the business partnership. Better off as one as principal (assumes the risks) and the other as "key employee", perhaps with better beneifts. Two companies with a close business relationship might be better in your circumstance. Just my 2 cents. __________________ *BOOM-diyada! Life is good!*

03-15-2010, 12:56 AM	#5
SummPlumb Senior Member Join Date: Feb 2010 Posts: 145 My Photos	I would leave it your company. Set up an S corporation with you being 100% stock holder for now. You will be the signer on the checking account. If he comes up with 16k plus assets, then you guys move forward. I have been in two previous partnerships and they go south if both parties don't bring equal pie to the table. You can still set his salary equal to yours, but if he walks, you have only lost a friend. Lots of negative things can happen if your equal partners right now. 1. He gets sick, you still pay him. 2. He gets in tax trouble personally, IRS comes after company assets and maybe yours. Take your accounts (contractors, jobs) and make sure their yours in the contract. Any that he brings will stay his. Any you gain together you split if the partnership dissolves. If he is an employee, you can give him other perks for his truck and tools. Maybe a truck allowance that pays his expenses. Of course I also like Miguels suggestion. You both have your own companies and form a third company with you guys partnered for doing bigger jobs or another form of plumbing. The problem with partnerships is that most partners do not act as partners. They act int the best interest of themselves. Be careful what ever you do. A good lawyer setting this up only cost 500 bucks give or take. __________________ "The Plumbing Guru"

03-15-2010, 10:12 AM	#9
para1 Senior Member Join Date: Jun 2008 Location: D/FW, TEXAS Posts: 1,367 My Photos	Don't do it. __________________ www.paradiseplumbinganddrains.com ft. worth plumber . plumber dallas . keller plumber . plumber benbrook. plumber arlington

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03-14-2010, 11:43 PM	#4
ChrisConnor Senior Member Join Date: Dec 2009 Location: Georgia Posts: 1,407 My Photos	I former employee started a similar parntership. Two years later he is back working for somebody. The "partner" with the money decided that he would make the decisions, when he really had zero business acumen. They skated along for a while, but it finally happened and they closed up. The blame went both ways. Remeber, luck favors the prepared.

03-15-2010, 01:15 AM	#6
niteowl Junior Member Join Date: Mar 2010 Location: fort lauderdale Posts: 22 My Photos	remember no buddy is going to work as hard as you do-period. so if you know this going in and are ready to accept this-example-does not show up for call on sunday night-then do the deal. i have been partners with-my brother, 1960's did not work out-with a co worker, 1980's-didnot work out-family member, 2000's, didnot work out. not many years left-i think i will finish my working career alone-as president and 100% share holder, s corp.

03-15-2010, 01:36 AM	#7
ToUtahNow Cruise Director Join Date: Jul 2008 Location: California/Nevada/Utah Posts: 2,414 My Photos	The best way to structure a partnership is to start by bending over and grabbing your ankles. If that does not appeal to you, don't start a partnership. Mark

03-15-2010, 11:36 AM	#10
907plumber Senior Member Join Date: Mar 2010 Location: Eagle River, alaska Posts: 120 My Photos	Well Thanks for all the responses. I talked to some freinds up here as well and I think everyone is in agreement here. No partners for me. I'll keep thinking about how else I can benefit from him, and he can benefit from me.