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 Legal Briefs
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           BFy Kathleen Cassidy Goodman, PLLC
requently, friendships are formed in the workplace. Co-workers who spend lots of time together discuss
their dreams and goals, and opening a business may be one of these discussions. Co-workers tend to have similar skills or skills that compliment each other, and it naturally follows that discussions regarding opening a business evolve over time.
Similarly, long-time friends have many of the same interests and experiences. As friends spend time together, they discuss their thoughts and ideas. After lengthy discussions regarding a wide range of topics, long-time friends frequently decide to open a business together. Business ventures between friends can involve two or more people with each identifying his or her role in the business in a particular way. Customarily, the parties will orally agree to each person providing an equal amount of cash to start the venture, and they will orally agree to each person performing a particular task.
As long-time friends, they assume they do not need anything in writing – they trust each other. This is a big mistake. Although, you and your friends may have the best idea for a business and trust each other completely, the worst thing you can do
is to form a business on a handshake. It is not because someone is not trustworthy, instead, people tend to have different unspoken, underlying assumptions regarding the business if not formalized in writing.
Parties thinking about going into business together need to discuss, and then put in writing, how the business will operate from startup to maturity. The basics include how much money each person is going to invest, what role each person is to play, how much time each person is going to invest, who is going to handle the paperwork, what the goals of the business are, the type of business entity, and what to
do if you don’t agree?
Going into a business with a friend
can turn into a really great venture if you prepare for it properly. Failing to set out what is expected of each person ahead of time and in writing is the best way to destroy a friendship.
Kathleen Cassidy Goodman is an attorney
in areas of estate planning, probate, civil litigation,
and business law. She can be reached at her office in Helotes at (210) 949-1000 or for more information, visit www.bexarlaw.com
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             October 2020
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