A new kind of Starting A New Biz question... (I think)

Ok, I got a lot of feedback recently about my own biz, but now I have a slight twist.

As you know (or don't know or remember) I work for a weekly lifestyles magazine that covers a lot of club events in S. Fl.

Well they are opening up the same magazine in ATL, NYC, DC, and maybe Boston (unsure of yet).

Basically I have friends in ATL, NYC, DC that are going to be the photographers for their location there. My question is if the 4 of us want to start a company, which option is the best?

We all want equal ownership in the case of expansion to markets outside our territories. That way we share the same amount of profits and more importantly we all share the same amount of expenses in the event we have to outsource some events in cities we don't visit.

Should we create one name and become partners? Or should we create one LLC and just put ourselves in as hired employees?

If this seems confusing, think of it as another business. A business of 4 people from various states gets together to sell a product over the internet. Would those 4 need a LLC and themselves as employees? I don't anticipate anyone else becoming a partner.

I'm not sure how much revenue you are talking about but I would suggest a limited partnership. This should provide protection of your personal assets in the event of lawsuits (at least in Canada it does to a large degree). I've seen many friends go into business together and come out of it never speaking again.

I don't like your idea of all 4 of you having equal decision making capabilities. Someone has to be in charge, a CEO sort of. You can certainly divide the profits any way you want even with that in effect.

My best suggestion would be to consult legal counsel on this. They would be able to tell you how to best structure something like this to maximize your revenues based on the difference in tax structures in different states. A good accountant may also be able to do the same.

Great advice. This is new to me and no amount of searching on here turned up anything like this. Many thanks for your input.

Ummm... the chances of this working are really slim. Four people in different states trying to run a company. Good luck. Either it won't get off the ground or it's going to crash land. The higher you get off the ground, the harder the crash.

Sheldon is right. You need a big boss to run things. You can't have four cooks in the kitchen.

My suggestion is to each run your own businesses in your respective cities. You can then create agreements between each other to refer business or have one web site that refers you. Unless there's some compelling reason to do this as one business, I'd make your life much, much easier and keep things separate. Having a partner is like being married. Do you really want to be married to these three other people?

John

I will echo John's concern about this "relationship". I had a very bad "breakup" of a 3-way partnership, and have come to realize that it's much easier to work with a 2-way partnership (because you sort of *have* to make it work), but with three, and I presume anything more than three) there's always the finger pointing and sides-taking that will kill the business.

So I'd encourage some sort of cooperative relationship where you each have your own business, but have some agreements you can put together on marketing and other shared activities.

Dave