Do I have to have a lawyer draft a business contract if me and another person are partnering to start a business?

UPDATED: Sep 30, 2022

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Do I have to have a lawyer draft a business contract if me and another person are partnering to start a business?

Me and another person want to start a
business. We will buy lots, hire
license contractor to build a home, get
a construccion loan and sell the
property once is built for profit. We
want to go half in all cost but we will
also go 50/50 in all profits. How much
money do I need to get a contract
drafted to specify this and have us
both covered? Also is it better to get
a business name and tax id number for
our business? So its actually a
business…..Please advise…

Asked on April 26, 2017 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

First, you want to set up an LLC that the two of you will own: having an LLC will protect your personal assets (e.g. home, money in the bank, car) from the majority of business-related debts or obligations. Having an LLC also facilitates using business expenses as tax deductions. Second, have a lawyer draw up the operating agreement for the LLC (the lawyer can also form the LLC for you). You will want to address your and your partner's respective authority and duties; how a decision is made if the two of you (as 50-50 owners) disagree, whether there is a mandatory or guaranteed buy-out of someone's share of the business in some circumstances, etc. 
Lawyers vary enormously in what they charge: that said, a reasonable estimate for the above is $1,000 - $1,500, but you can lock in the cost ahead of time, so you don't hire anyone too expensive or have any surprises.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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