How should I protect myself when starting a company with my friend?

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How should I protect myself when starting a company with my friend?

I am leaving my steady job in order to start up a company with my friend. My friend will be the major investor of the company while I will be doing most of the work for a modest salary. What do I need to do so I am protected in case he wants to back out of financing the company?

Asked on August 28, 2012 under Business Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You need many things but it depends on how you wish to work it.  You can use an operating agreement that spells out the terms between you now and what can happen in the future.  A partnership agreement.  An LLC agreement - the type of business may dictate which is best and you should speak with ana ttorney before you jump in to anything.  Good luck.


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