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View Full Version : HOW can I operate a business using 2 separate entities?



makoaspire
10-19-2010, 05:32 PM
Here's the scenario:

I operate a small single member LLC in NJ. My prospective partner operates a S-Corp in Delaware doing the same work. We want to join forces under my existing company name since I'm established in the area and open a physical location in Delaware (yet continue to do business in both states). He brings equipment to the venture, our agreement is that I pay the first year's rent on the location as my "buy-in". I understand the logistics of filing as a foreign company to be able to do business in DE, etc.

My question is HOW to jointly operate this company without me becoming an officer in his company or vice versa. I have already seen a lawyer and came away with more questions than answers. Does a wholly new entity need to be created? Perhaps some real world business owners can guide me. Thanks for your help.

Business Attorney
10-20-2010, 05:50 PM
Probably the easiest and cleanest thing would be to create a new entity (probably an LLC) to operate the new business. The main reason is that the new business (operating as a joint venture (http://www.illinoisbusinessattorney.com/articles/joint-venture-agreement.html)) would likely be considered to be a general partnership under state law. That means that your business would be 100% liable for any claims against the joint venture, even if they arose due to an action by your partner. Similarly, his business would be 100% liable for any obligations of the joint venture that you created.

Hopefully your lawyer can answer your questions, because going forward without the proper planning can be very costly.