Advice on a limited partnership

**jtb21** · 01-18-2008 05:58 PM

Here is the situation. I have been a Regional Manager for a big retailer for the last 8 years. I am starting my own retail business and have two financial partners ( that are family members ). I need advice on what to offer these partners as far as a rate and terms of repayment. Anyone with experience in this type of limited partnership advice would be very appreciated.

**SlvrBulletV6** · 01-19-2008 11:20 AM

Originally Posted by jtb21

Here is the situation. I have been a Regional Manager for a big retailer for the last 8 years. I am starting my own retail business and have two financial partners ( that are family members ). I need advice on what to offer these partners as far as a rate and terms of repayment. Anyone with experience in this type of limited partnership advice would be very appreciated.

Have you considered other forms of business formation such as LLC? If the family members are going to be partners, they are investing in your company, where they just get a percentage of the profits per their ratio of contribution. It sounds like if they want you to repay with interest, they are most likely giving you a loan.

Partners takes a percentage of the profits as well as the losses for their contribution.

**BusinessAdviser** · 01-19-2008 11:43 AM

Yes, fill us in a bit more. Why a limited partnership? Why are you offering a rate and terms of repayment if you're already giving them ownership interest? Do you have an Operating Agreement? Provide more info please.

**jtb21** · 01-19-2008 02:32 PM

I am considering setting up as an LLC or a partnership, sorry about the confusion. Basically I have two family members willing to help with the start up costs and I'm looking for advice on the safest way to protect all parties involved. The business is a retail sporting goods store focusing on team sports and outdoor sports. One individual is offering cash and the other is offering cash and is willing to put up property for collateral on a loan for the business.

**BusinessAdviser** · 01-19-2008 04:43 PM

Originally Posted by jtb21

I am considering setting up as an LLC or a partnership, sorry about the confusion. Basically I have two family members willing to help with the start up costs and I'm looking for advice on the safest way to protect all parties involved. The business is a retail sporting goods store focusing on team sports and outdoor sports. One individual is offering cash and the other is offering cash and is willing to put up property for collateral on a loan for the business.

OK. Let's start at the top. You are trying to determine the type of business entity under which to operate your business and have narrowed it down to two choices: 1) a limited liability company, and 2) a partnership.

Do you know the differences between each of these?

**jtb21** · 01-19-2008 05:21 PM

Yes, that's correct and yes I understand the difference between the two. My biggest concern is that my investors are family members and I have heard far too many stories of situations gone wrong in family business ventures. I'm basically looking for advice to protect all individuals involved and what should be offered back to the individuals who are helping me with this business. I'm also looking for feedback on which of the two entity types would you suggest in this situation.