Looking for a best and cheap way to protect my service-based investments into business owned by sole proprietor.

Asked over 1 year ago - Carson City, NV

I have a friend who own popular website where he sell advertisement for last 10 years. A year ago he asked me if I want to join his business (I own web development company) if I do complete rebuild for his very big and popular resource and get 20% of total business. I agreed, and my company did the job (worst ~$100K). We agreed that his website value is $400K (he really have tons of unique media content etc).

We agreed that I am not responsible for any losses and operational expenses in business. But I will own 20% of business assets (since March 1, 2013) and will have 20% from net profit (starting from March 1, 2014, - till that date no profit payments). And my value will be worth $100K.

I need to find lawyer who can help me legalize this deal. But I can't pay much for this.

Additional information

I am not looking for any income from this deal this year. I just want to save my company work for better time (we plan in future to get some investors, or sell business at all). So I just need "to put this deal into bank safe" and don't worry about it at least for one year.

And I don't actually need any managing and voting rights. I just need to be sure that if my partner decide to sell business for $1.00, I still will have my share 20% equal to amount $100K. I need to be sure that if my partner will do something wrong or illegal, or will get some debts - and someone will sue him - I don't want to loose my 20% (worth of $100K). I am okay if new investor will come and will want to buy out my shares (but not less than $100K). I also need to be sure that since March 1, 2014, I will start getting some money from net profit of this business (and at the same time I wont be responsible for any losses, or any operational expenses etc - my partner agree with it).

Attorney answers (3)

  1. Richard Edmund Hawkins

    Pro

    Contributor Level 16

    2

    Lawyers agree

    Answered . It is unlikely that any attorney is going to do significant pro bono work for your profit-making endeavor. If it's not worth the cost of his time to you, why would it be to him?

    Generally, an LLC with a customized operating agreement is the best way to handle these, but you really need to pay for the value of waht is being done

  2. Thomas D. Boley

    Contributor Level 14

    Answered . This is labor-intensive legal work that you are asking to be performed. This is not something you want to trust to the lowest bidder, nor something you are going to get done for $300.

    I truly recommend Richard Hawkins. He is very experienced at this type of law.

  3. Douglass S Lodmell

    Pro

    Contributor Level 13

    1

    Lawyer agrees

    Answered . A Limited Liability Company is a very efficient legal tool to hold and manage the business. However, even if you have a limited share, it does not offer protection for you and your personal assets.

    Depending on your personal net worth (bank and brokerage accounts, primary residence and other investments) you may consider combining your share in the LLC with a legal tool that was specifically designed for asset protection purposes: a Family Limited Partnership filed in a state with strong charging order rules such as AZ.

    I recommend you to seek council with business attorney that has proven expertise in setting up web-based ventures. I agree fully with attorney Hawkins. A properly set up LLC, with a detailed Operating Agreement that deals with issue as profit sharing, exclusion of an LLC member, buy-out and similar will save a lot of time, financial resources and headache down the road.

    Depending on your personal net worth, you may also want to contact an experienced asset protection attorney.

    Douglass Lodmell is the nations #1 Asset Protection attorney and has clients in all 50 states, protecting over $4... more

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