Legal Question in Business Law in California

Re: Business

There is no way to tell you what type of business entity you and your friend should form without a lot more facts. This website is not equipped to offer such specific advice. You should consult with a lawyer directly.

Re: Business

As Mr. Hoffman says, it depends. In general, you do not want to be in a joint venture or partnership without a detailed, custom, and attorney-drafted joint venture or partnership agreement. Without one, default partnership law may apply and disputes are likely. After sorting out how you are doing business, how do should be doing business, and getting that in writing, documented properly, all necessary filing, only then should you file a DBA, and the prior determinations will dictate how you need to file your DBA.

Re: Business

The word that caught my attention in your question was FRIEND. If you do nothing, the law will apply certain partnership default provisions to your business. You risk that this is the wrong way to format your business, but much more importantly, you risk your friendship. I can't tell you how many prior friends we have seen at the office after things go wrong. Sometimes, things didn't even go that wrong, but the friends had different recollections of what the deal was supposed to be. It is absolutely imperative to your friendship that you see a lawyer. A partnership agreement (or other entity formation) does not have to be overly complicated, but it should fit your plans and goals. The agreement will serve as a memorialization of your intentions that you can refer back to and avoid future conflicts. I wish you the best in your business and a long friendship. You are welcome to call my office or call a local attorney in your zip code.

Re: Business

If you are not forming a corporation or a limited liability company, your venture will be a partnership or joint venture, which for your purposes are essentially the same. It does not sound like a limited partnership would be appropriate, as that is more often used as an investment vehicle rather than a venture where you and your friend will both be involved in management.

A more important issue is what the arrangement will be with your friend. Whatever it is, IT SHOULD BE IN WRITING, so there is no misunderstanding between the two of you down the road. You should consult with an an attorney to draft a partnership or joint venture agreement.

Re: Business

If you are in business with someone else, i.e., sharing profits and losses, it is a partnership.

Limited partnerships differ from general or ordinary partnerships in that they are formed by filing formation documents with the Secretary of State and they have two kinds of partners, general partners who run the business and take the risks, and limited partners who aren't allowed to manage but are not liable for the partnership debts. You aren't a limited partnership unless you have filed the papers to be one.

A joint venture is also a special kind of partnership, usually formed for a very limited purpose and for a limited time, e.g. a joint venture between a steel company and a contractor to build a bridge. You may be a joint venture but probably aren't, and the differences between them are quite slight anyway.

I have never understood why the dba form attempts to make a distinction between co-partners and general partnership. Co-partners are the people who own and run a general partnership. The first term refers to the people, the second to their entity.

If you agree that your business is probably a general partnership, I advise getting a self-help book on how to form and run a partnership business. Since you probably don't think you can afford a lawyer, you could at least gain the benefit of the author's wisdom, and there is probably a model or blank-form partnership agreement in the book that you could copy and use with better effect than no agreement at all, although a lawyer-drafted agreement is certainly far preferable if the business will be handling much money, hiring employees or consuming much of the partners' time.