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GWarren For Business & Nonprofits
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience:  30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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I am about to enter into a partnership with my future son-in-law

Resolved Question:

I am about to enter into a partnership with my future son-in-law and am looking for advice on banking. I will be taking the lead on all business aspects of the venture and he will be doing the actual "work" that I will be dispatching to him. I am the main financial backer and I would like to know if in a partnership such as ours should I keep the banking part of the deal in my name only or should we open a joint "partnership" account?
Submitted: 5 years ago.
Category: Business Law
Expert:  GWarren For Business & Nonprofits replied 5 years ago.
Thank you for contacting justanswer.

No matter how good the relationship at the outset, in any matters involving partnerships it is always a good idea to prepare a detailed partnership agreement in advance of the business venture. (Despite the best of plans relationships may and sometimes do change and anticipation of all possibilities in a partnership agreement can address financial arrangements, dissolution, change in business plans, etc.) Are you also firm on a partnership relationship or are there potential financial and activity liability concerns that may cause you to consider a corporate form that will provide you with personal liability protection in the business so that neither of you are expose to liability as individuals - rather limiting it to the business?

SCORE, Counselors to America's Small Business provides free face to face and online business counseling sessions that can assist with the partnership issues (questions to consider in forming a partnership) and items to address in the agreement. Tools are also available online at:

http://www.score.org

That said, an approach may be to have both partners listed on the bank account as a joint account with dual signatures required on the account.
1. The purpose of that arrangement is to help avoid any concerns regarding use and payment from the account.
2. If it is not cumbersome the dual signature arrangement also enables a close partnership connection and review of financial matters (even though you would be the primary funder, it would engage your future son-in-law in that aspect of the business and promote sensitivity to financial aspects of the business).
3. Once the business begins making money, the partnership account and dual signature arrangement will also help you son-in-law see that you are then both contributing to the account. If you do not elect a dual signature requirement a concern may be that either party can draw from the account, which may not be your preference if you are the main financial contributor to the account at the outset.

I hope this is responsive to your question. If you would like further clarification or information that may be state specific or even detail on forms of corporation formation, please let me know.
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience: 30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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