[totters_traders]

hi guys
i have been talking about starting up a company/business idea with 2 friends, i dont want to go into too much detail howevr it is a website idea that will hopefully make money
i am very new to this and would like to know all appropriate steps that ai should be looking to put in place.

things i have been thinking about are

when approching companies for sponsorships/advertising etc do i need them to sign any copyright materils forms

do i need to get my potential business partners to sign this so none of us can start up a rival company after 6 months etc

if we are all equal partners , do we have one business account in all 3 names or is it just in one person name and payments get split from that one account

are webites that make money set up as llc companies or do we even have to rigister it ??

if we are making money through subscriptions via credit card or pay pal type systems , do we show revenue to tax inspectors

[totters_traders]

also how do i protect myself from anything or any personal debts they may have effecting me

[phppoddotcom]

If you want to protect yourself and your partners from depths it is better to settle llc. On the other hand for a start up company it is a bit "over the top". You will definitely have to pay taxes despite the type of the business. I would advise to ask a lawyer.

[GonnaBthere]

I think if you give more detail to what type of website your trying to start you will get more feedback. At least the type of business your trying to get to into. Just saying your making a website that's going to make money, isn't enough information to get you answers to specific questions except that yes you will need to pay taxes.

Whether you need to register as an LLC or a C or S corp, could depend on what type of product your selling or services your offering. You might not even need any of those. Perhaps a basic partnership would be enough, but there is no way to tell without more information.

As far as having multiple partnerships, I can offer this advise. A partnership is like a marraige. And having more than one can make it that much more difficult. Make sure you know what each person is going to be responsible for. If you go into it with no plan, you will come to a time where too many people are making the same decision and each will want something different. Get in order who is to do what, how and when you will be paid, what you will do if there is no money to pay out and an exit strategy. There's much more to consider but it should be a start.

[GuyBBY]

when approching companies for sponsorships/advertising etc do i need them to sign any copyright materils forms

This you should talk to a lawyer or read up on copywrite law and policies. You should elaborate what you mean by this with an example.

do i need to get my potential business partners to sign this so none of us can start up a rival company after 6 months etc

You would want to work out agreements on the terms you wish through business contracts between your partners, and I am assuming by partners here you are reffering to affiliates and not the members of your business. If you are talking about the members you will be working with, you need to indicate these "non-compete" terms within your operating agreement

if we are all equal partners , do we have one business account in all 3 names or is it just in one person name and payments get split from that one account

If you are going this route, I would suggest an LLC, as this will provide you with the ability to be a seperate entity, e.g. John Jim and Joe are members in the seperate and independent entity of JJJ, LLC. Now you will have limited liability, and can get an EIN and a seperate business bank account and in your operating agreement you can indicate who will be the managing members, how you will allocate/distribute membership interest and profits, and all this I would recommend some detailed reading/mtg with a lawyer/meeting with your regional SBA or SCORE counselors.

are websites that make money set up as llc companies or do we even have to register it ??

To prevent from any hairy situations occurring with liability issues involving customers or internally with members, I would again go with the LLC.

if we are making money through subscriptions via credit card or pay pal type systems , do we show revenue to tax inspectors

You would disclose all of this information when you file tax forms on behalf of the LLC and your own personal filings come year end. LLC, unless large/having lots of income/special services/etc can be taxed as a pass through entity and if you read up on this you will see how the flow of cash/liability/filings/fees/etc work with this structure.


What you need to do is develop a business plan and some basic projections to see if it is worth filing for the LLC as there are yearly fees regardless of income/expenses, gain/loss, and also you will have the ability to really know your business and have a thought out plan rather than going about it day-to-day and end up wasting time and money in the end.

Get the business plan/projections/thoughts and reasonable knowledge of what you wish to do and then come back with specific questions that YE members can address for you and steer you down the right path.

Best

Guy

[totters_traders]

thanks great advice
couple more questions, can i protect myself from being voted out of the comapny by the other members, even though i would like any money earned split equally

[akula]

Originally Posted by totters_traders

i would like any money earned split equally

you have no idea how startups work, and this line of thinking will send you broke
there are ways to deal with this problem

[totters_traders]

y will this send me broke, me and some friend s have an idea, i just wanna know that in say 2 years down the line if we have a fallout or something happens im protected

[GuyBBY]

Right, and you need to do all that within the operating agreement. That is an animal in of itself, and either A. should be discussed and created with a lawyer or B. you should get a very well versed background in contracts, pertinent information that should be outlined in them, laying out restrictions, definitions, permissions, etc., draft something you would want in semi-legal/your own words...THEN still get it reviewed by a lawyer.

I am in business with 4 very good/best friends and I still was brutally honest and forward in my contract so as there was no mistake between friendship and business and a day, month or years later I wouldn't be shooting myself in the foot by relying on fun thoughts of Entourage.

Guy

[totters_traders]

ok so if you have done it, what did you do to protect your self, as in can you get voted out by the other 3 friends, say you were to fall out over someting with 2 of them and they want you oput

[totters_traders]

Originally Posted by akula

you have no idea how startups work, and this line of thinking will send you broke
there are ways to deal with this problem

please share your thoughts, im only 19 and have little experience

[JLeezer]

In my experience (personal and through reading others') there needs to be a single person that is ultimately responsible for the decisions over the business. This does not mean that you must split the ownership of the business, just the decision making power.

For example, if you and three others went in together, you could split the ownership 25% each. But, I'd advise that one person be given the authority to make all final decisions. The four individuals can participate in a "board of advisors" type role, but the decisions boil down to the one put in charge. Now, each of the other three may have their own departments that they have been put in charge of and should be given a large amount of independence; but, if the one person in charges feels it is in the company's best interest to dictate down the ladder, it must be followed.

If you end up splitting the decision making control 25% each, you will eventually find that you are teaming up against or for each other and the outcome is frustration, strained relationships, and eventually departure from the company...as opposed to the goal, better decisions. Group thinking results in excellent ideas. Group decision making results in confusion/frustration. A single, well-educated (in respect to the decision to be made) leader making a decision results in a quick, fairly good decision being made.

To answer your original question, though, you will want to draft a partnership agreement of some sort (it depends on your state/country). This may include a provision stating that all of the other owners must vote the other out on two different occasions a certain number of weeks/months apart. This could help to mitigate "in the moment" bad decisions.

[akula]

Originally Posted by totters_traders

y will this send me broke

it's not complicated..

in startups that last, people are rewarded in proportion to their individual contributions (rather than equally)

since you and your partners will all contribute diffrent amounts of value to the startup, it is inappropriate for salaries/dividend/profit distributions to be equal for all involved

when this advice is ignored, the result is as follows: partners who contribute more than others feel like they're both getting short changed and overcompensating the other partners who are not carrying their weight...from this point, resentment builds and the startup implodes

the issue needs to be managed

[amitch56]

Incorporate it separately. And do up a proper partnership agreement that covers all possible instances such as death of one of the members, illness and falling out.

[totters_traders]

any sugestions on how to word this!!!! this is wht i need help on