Legal Question in Business Law in California

When two or more persons go into business together, and do not form an organization such as a corporation or LLC to own and run the business, they have almost certainly formed a partnership. When you avoid the expense of forming and running an LLC, and choose to operate as a partnership, you also assume certain risks, including liability for the debts of the partnership, regardless of which partner incurred the debt. You should therefore consider the risk of personal liability and the possible costs thereof when deciding that a risk-limiting organization such as an LLC is too costly. However, if you and your proposed partner trust one another and are willing to take on the possible risks, forming a partnership might be a good choice.

As to type of bank account, I suggest explaining to the bank officer that the account will be for a partnership business, that X and Y will be the partners, and that either X or Y may sign checks and withdraw money (assuming this is your agreement). The bank will then ask a few questions, probably including the partnership's tax-identification number, sometimes referred to as an employer identification number (TIN or EIN). You'll probably want to obtain your TIN/EIN before visiting the bank; this can be done on line or by telephone or by applying in person at a local Internal Revenue Service office. Try www.irs.gov as a start.

Splitting the taxes 60/40 requires an agreement between the partners that this is to be done. The agreement can be oral, but for safety and certainty, I'd recommend having a fairly comprehensive partnership agreement. You can find sample partnership agreements in the paperback books that are widely sold in bookstores and on line respecting how to set up and operate your own partnership business. One popular publisher is Nolo Press. Remember that business laws vary from state to state, so be sure that any book you rely upon is written for California law. Splitting the income 60/40 also requires at least an oral agreement, with a written partnership agreement much to be preferred.

When your visa and work permit expire, the partnership will continue and you can continue to own 60% of it. The partnership can keep on selling its product......remember, the product is made and sold by the partnership, not you. I'd say the business probably can continue as before. A visa is required only for physical presence in the USA, and a work permit affects only your right to be employed in the USA, not your right to own a business and participate in its management from Europe. However, this is outside my area of legal expertise and I would suggest that you verify with a consular office or immigration-law expert.