The Best Structure for a Partnership | Mark J Kohler | Tax & Legal Tip - YouTube

Hi Mark Kohler here with another two-minute tax and legal tip

I want to talk about the legal structure for a partnership now

this is really really important because there's a lot of options and

A lot of people screw this up by just doing a handshake or some sort of deal

Via email and so I want to give you two or three ideas and the best way to structure your partnership first

Let's talk about the basic joint venture agreement

Now this can be a little dangerous because it would be considered a general

Partnership and both parties could be personally liable for an any action of the other that's usually not the best structure for asset protection

But at least it gets the deal started in it and bare minimum. I want you have a quality joint venture agreement

Sometimes loosely you can call it a partnership agreement a lot of people Claud a JV agreement where you could have two people with this

JV agreement agree to do a project together and

What's cool in fact one of the parties could be an entity like an S?

Corp and the other one could be a person the other one could be an LLC it could be to

Market something on the web. It could be something to do with real estate, but it's called a joint venture agreement

typically two to three pages and it memorializes the agreement between the parties folks

Please do not do your partnerships on a handshake start at least with a joint venture agreement?

Number two and you knew I was going to say it, it's the limited liability company the LLC

This is a phenomenal structure because it's so flexible and easy to allocate partnership profits voting rights all that good stuff

we love the LLC for this but an LLC beacon can be used in two different places so the

second tip here is using an LLC to hold property an LLC where you might hold real estate or an apartment complex or a

Development of some sort this is an LLC used for holding assets

Now this is a very

unique LLC in the sense it's like a holding company and

Typically you might have an individual's trust as an owner or another LLC that's kind of a parent company for multiple. LLC's and Holdings

This LLC should be set up in the state where you're doing business watch some other videos on that issue

But this is a holding company LLC and perfect when you're holding assets

Have a good quality operating agreement and checkbook for that type of relationship with a partner now number three

I want to talk about an operational partnership, so you're running a business think of this as the building now

Here is the restaurant this could be the development. This is the rental so you've got all these different

operational aspects of selling a product or a service and typically again

We're gonna lean on an LLC now. That's not in every state but generally

That's where you're going to start, but we don't want to pay self-employment tax on this ordinary income

We're producing in these operations, and so we need to involve a S corporation

And this is where the individual owners of an LLC might be their own S

Corp where they can do all sorts of their own individual tax planning save on self-employment tax

But have an operational partnership in a form of an LLC separate from an LLC. That's a holding LLC

Love this these are three options that can help you structure your partnership to stay out of hot water

And get better tax planning watch them my other videos on these topics to continue education on ways to better live your American Dream

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