Two LLC's working together

Asked almost 3 years ago - Tacoma, WA

My husband and I have an LLC that mainly does video production. We have a friend who also has an LLC in the same line of work. My husband will be working on a video project with his friend - hubby will shoot the video and our friend will edit it. The plan is for the client to pay one of them and then they will figure out how to split the proceeds. What would be the best way to do this, without going into an elaborate partnership agreement?

Attorney answers (3)

  1. Kenneth Allyn Sprang

    Contributor Level 15

    6

    Lawyers agree

    1

    Answered . I believe the simplest model would be (1) the client enters into an agreement with on LLC; (2) the first LLC subcontracts for services of the second LLC. I would suggest that your LLC have the contract with the client since absent good shooting the video is worthless. Create a simple subcontract between the two LLC's in which the friend agrees to edit, but the friend's client is your LLC. You really are best served by determining compensation, at least minimum compensation in advance. For example, if you quote the client $5,000 you could agree to pay the other LLC $2,000, or whatever a fair number is. You could include a proviso that if there are undue complications or other factors that the two parties can review the compensation. You should definitely, however, not leave it open ended. That could be a disaster waiting to happen, even if your husband and the other fellow are good friends.

    Ken

  2. Robert John Murillo

    Contributor Level 20

    5

    Lawyers agree

    Answered . You could do this through a contractual joint venture. Do yourself a favor and get an attorney (the fee can be split between the two LLCs) to draft a good agreement. It is money well-spent as the agreement may not be complex as an operating agreement, you do have intellectual property and other issues that require complete understanding.

    This answer is for informational purposes only and is not legal advice regarding your question and does not... more
  3. Richard W Beck

    Contributor Level 11

    3

    Lawyers agree

    1

    Answered . contractual joint venture (just make sure each parties responsibilities are clear and unequivocal and there is an easy, self-help remedy if one fails and the other has to do the work)--nothing special required just keep good records so your respective accountants can treat the income correctly.

    Legal Disclaimer: Richard W. Beck is licensed to practice law in Colorado. His answers are for general information... more

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