Do I have to have a lawyer draft a business contract if me and another person are partnering to start a business?

Me and another person want to start a
business. We will buy lots, hire
license contractor to build a home, get
a construccion loan and sell the
property once is built for profit. We
want to go half in all cost but we will
also go 50/50 in all profits. How much
money do I need to get a contract
drafted to specify this and have us
both covered? Also is it better to get
a business name and tax id number for
our business? So its actually a
business…..Please advise…

Asked on April 26, 2017 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

First, you want to set up an LLC that the two of you will own: having an LLC will protect your personal assets (e.g. home, money in the bank, car) from the majority of business-related debts or obligations. Having an LLC also facilitates using business expenses as tax deductions. Second, have a lawyer draw up the operating agreement for the LLC (the lawyer can also form the LLC for you). You will want to address your and your partner's respective authority and duties; how a decision is made if the two of you (as 50-50 owners) disagree, whether there is a mandatory or guaranteed buy-out of someone's share of the business in some circumstances, etc. 
Lawyers vary enormously in what they charge: that said, a reasonable estimate for the above is $1,000 - $1,500, but you can lock in the cost ahead of time, so you don't hire anyone too expensive or have any surprises.


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