Where Form 8865 Partnership 2023-2024

Thank you for tuning in to the Startup Builder videos on YouTube with Mark Weinberg. Today, we will be discussing business partnerships and what can go wrong. There are five key things to watch out for in a business partnership. Firstly, it is important to split equity evenly among the business partners. Many partnerships fail when there is an uneven distribution of equity. For example, if one partner receives 70% of the stock while the other only gets 30%, resentment can arise. To avoid this, it is best to split equity evenly. Secondly, in a two-person partnership, a 49-49-2 split can work well. Each partner receives 49% of the stock, and the remaining 2% goes to a tiebreaker figure, such as a business consultant or advisor. This tiebreaker can help resolve conflicts between partners. Thirdly, it is crucial to consider the hours worked or sweat equity contributed by each partner. If one partner is putting in more effort while the other slacks off, it can lead to tension. Therefore, it is important to establish expectations regarding the amount of work each partner will contribute. Next, the control of finances is a significant aspect to determine. You need to agree on which partner will handle the bank account, credit card, loans, and lines of credit. It is essential to prevent any misuse of funds and to have clear guidelines on spending. Lastly, having an exit strategy is important. Just like in a marriage, not all business partnerships are meant to last forever. One partner may lose interest in the business while the other wants to continue. It is advisable to discuss and plan for a possible exit strategy, such as buying out the other partner through company funds. In conclusion, when entering a business partnership, it is crucial to address these five points: equitable equity split, a...