Teach me about business partnerships.

Okay, so the Mobile Oil Change idea is kinda dead. After much thought, I decided that my town is just too small. If we ever gain, say, 25,000 more residents I might rehatch the idea. For now though, I present you this.

My co worker, and best friend has suggested to me starting a garage together. Our bread and butter would be regular car repair. Brake jobs, tune ups, starting out small since we probably wouldn't have a brick and mortar location for a bit. For once I'm not really trying to break the mold.

My question to you is this.

In a partnership, how exactly does it work? How do things go come tax time? What are the positives and negatives to it all?

How is his work ethic? how good a friend is he? how much does money mean to you? how do you want a partnership to work?

98% negative, 2% positive on partnerships.

At the very least, go get a lawyer and if they don't talk you out if it, have them draw up a proper agreement.

Work ethic is hard to judge. At work (we work in retail) he kinda drags his feet, he really doesn't like it anymore, been ready to get out for some time now. Our E36 M3ty new GM has just put the icing on the cake though. However, he and a I have worked on cars before and he almost develops a fervor about it. If anyone ever enjoyed working on a car, it's him.

I've known him since middle school, and he's the only real friend from school I've kept up with. Best man at my wedding, got me my job where we're at now.

I figured we'd split things right down the middle, but I know things seldom seem to work that way. I've heardof partnerships going south, ruining friendships, so on, so I wanted to ask the peanut gallery what their thoughts were.

MY stance on money? You can't take it with you.

Develop the business model on paper, ask him to do the same. Do your ambitions synch? where is the money coming from?

Money is coming from SAVINGS being as quitting college kinda fudged up my credit. He's all gung ho for a loan, but I'd rather avoid debt if at all possible.

Make sure you both know exactly what you expect out of the deal and write it all down. Brain storm for days.

Do it with no debt. I can not stress that enough.

Much experience here. A good friendship will be killed by a business partnership. Debt will just kill it faster. Avoid a partnership at all costs, the benefits are grossly outweighed by the problems. Sorry, but find another way, all by yourself. You WILL thank me later.

A partnership is the worst thing you can possibly do to yourself and your family. Don't be stoopid. Better to hire your friend on some type of commission basis if you really want to go in together.

Here's a simple partnership: Your "partner" blows all the dough on hos and blow. Guess who "they" come after for the money? Look in the mirror.

Business partnerships will work as long as you realize one thing. It's like being married. If you can't live with the person every day, don't do it. If you can't disagree with him and discuss it rationally and reach an agreement, don't do it. It is a study in the art of compromise, just like a marriage.

I run a company with a partner, 50/50 split. It works for us and has for 7 years. We didn't start as friends, and I wouldn't say we are good friends now. We are business partners. When we walk in the office door in the morning, it's all business.

Responsibilities and expectations need to be laid out and on paper. A business plan needs to be agreed on and on paper including what each of you bring to the table to get started. An exit strategy needs to be agreed on and on paper should anything go south.

As far as taxes, we are a LLC, taxed as a partnership. This means that at the end of the year you and your partner get a K1 form. It will show total company income, and your share. It takes the place of a W2 form you would get from an employer.

Think long and hard about this. Like marriage, it isn't something to enter into lightly or on a whim. It can work very well, or fail spectacularly and cost you a friend. Good luck.

TRoglodyte wrote: Develop the business model on paper,

This is the first thing to do. Make sure your town can support another auto repair business before doing anything else.

Dave Ramsey says no.....a few good ideas to think about at least.

http://www.daveramsey.com/article/the-dirt-on-partnerships/lifeandmoney_business/

As always, answers raise more questions.

A joint venture sounds a little more short term, although I think this would keep the whole "I'm carrying your weight" thing to a minimum, not that I expect it.

I'm sure it could be outlined in the business plan, but anyone care to enlighten me more than wikipedia can?