UPDATED: Oct 1, 2022
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I currently have an LLC and wish to invest money in to an established business
that has it’s own domestic corporation. Should we file a partnership with the
state, and if so what type? There is talks of signing a service contract instead.
Is this a better option
Asked on April 3, 2018 under Business Law, Nevada
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
There is no right answer: it depends on what you want to do.
1) Do you want to be an owner of the company? Buy its stock, either in your own name or have the LLC buy it.
2) Do you want to do joint venture? You and they set up a new business (e.g. corporation) that both existing businesses invest in, own, and run.
3) Do you want to provide goods or services to them? Contract to do that.
4) Do you want to make money from them without being an owner, and in a way that is more guaranteed (less risk) but also less upside potential? Loan them money with a written loan agreement that spells out interest rate and repayement schedule, and get some security interest (such as in their property, equipment, inventory, or accounts receivable) to protect you.
Figure out what you (and they) want to do, then meet with a business attorney to figure out how to best effect that.
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