Next step with a business partner

[Christina Colon]

I've reached the point where I'm ready to partner up! 

my business partner and I have decided to go in on investing together! I want to ensure we do this right, but I feel lost and stuck! 

I'm looking for experience here, we are ready to take on our first deal together but unsure how to structure it so we are both protected. 

My questions are:

How do we legally set our agreement and protect our business? 

How do we file taxes under our business (Our LLC) ?

Who do we bring on board with us to ensure we are legally doing the right moves? 

How do you conquer book keeping if you both have to your personal funds into the deal? 

There may be more I'm leaving out, but any help would be great! 

For transparency:

Our vision is to build a portfolio of STR and MTR. I currently own two STR's and manage his STR.

Thank you all! 

[Michael Thach]

- gather your thoughts and what is important for you two

- go to an business attorney and let him explain you which entity type fits your need

- let him draft an operating agreement and see if this is what you like and revise it if necassary

- ask an CPA and do a conference call between your attorney and CPA and check if both are on the same page and if bookkeeping can be done with that entity form

This is how I structured my 6 entities with family/friends/partners/limited partners/investors ect. 

To save cost and headache I suggest to keep your property and his property out. Keep it as it is. Only the new stuff has to be structured. Otherwise it's a nightmare for attorney and CPA to protect both of you. 

Usually a business attorney cost around $300 / Hour , CPA $150-$300/ hour. A draft of operating agreement cost $500. 

[Bonnie Low]

Totally agree with @Michael Thach that you need a real estate attorney and a real estate CPA. Let them guide you at setting up your business properly. There are endless ways you could structure your partnership, but you want someone to advise you how to do it in a way that protects both of you and your assets in the best way possible and with the right taxation structure for your particular situation.

[Jake Baker]

@Christina Colon

You should consult with a Real Estate attorney to draft up an operating agreement for your LLC.

Keep all business transactions within your business bank accounts and credit cards. 

If accounting isn't your thing, consider hiring a bookkeeper for a couple hundred dollars per month to manage your QuickBooks for you. Good bookkeeping will ensure that your CPA can properly advise you through your business growth. 

Initial funding with personal funds is fine. This is just considered a partner contribution on the books. 

Congrats on all your success so far. Happy Investing!

[Christina Colon]

Thanks so much for this feedback! We have started the LLC. I will reach out to my CPA and find a good real estate Attorney! Thanks a million!

[Simon W.]

you should focus on getting a real estate CPA.

As for the bookkeeping - make sure you have someone that focuses on real estate so at least that person can allocate the differences and not make a total mess for the CPA at year-end.

[Basit Siddiqi]

There are normally three traits to make a business successful - Experience, Money, Time.

You mentioned already not having the experience. Does your business partner bring the experience.

If he doesn't bring experience, stop the partnership and either bring in another person who does have the experience or gather experience and then bring it to the partnership.

[Nate Meeker]

@Christina Colon be aware that if you do start forming entities you may have additional tax filings. I always like to see a dating period before marrying partners under an agreement.