I started a small business and my sister wants to be a partner. How can I protect myself if this doesn't work

out. I want to have a partnership agreement , but I am unsure of what terms to use. I want to have more control over the business then she does,because it was my idea and I put in the intial work to start it. Starting this business has been a dream of mine for years and I don't want to lose it.I started a small business and my sister wants to be a partner. How can I protect myself if this doesn't work
I would keep it as my own. Partnerships with family members rarely work out. Money can become a real problem when you are related. If you need a partner then I would say keep at least 51% control of the business because then you will have controlling interest in the company. This means that you will be the one that makes the final decision. At first give her 25% partnership to see if she is serious about the business and works as hard as you do to see it succeed. If she is doing her part then increase it after 6 months to 49% interest. But I still say unless you need a partner for financial reasons or time management is an issue for you then do it but if not keep it. Another thing you could do is have her work in the company as an employee for six months to see if she would like to do the job every day year in and year out. Then if she does talk partnership with her. You are right to be cautious after all this business is your baby and you want to see it grow.I started a small business and my sister wants to be a partner. How can I protect myself if this doesn't work
The correct answer is anytime a partnership takes on a new partner the old Partnership is legally dissolved but thats only in a legal sense. Change your partnership to a S-Corp and you'll do away with all the B.S. In your By-Laws you spell out each persons responsibilities and ownership rights. Visit the link below and read it and then go to the visiters page. It doesn't cost anything to visit.
If you already have these concerns, perhaps having your sister as a partner is unwise? Could you tell her that you value your relationship with her too much to risk it over a business venture?
Find a good honest attorney experienced in writing up business agreements. Put into the document that you control at least 51 percent or more of the voting power, and that as the founding partner, that you for the *duration* of the partnership retain the physical and intellectual rights to all properties. Also put in that if the partnership does not work out during the first ten years you retain the right to *unilaterally* buy her out for one dollar, after 15 years unilaterally for x dollars, after 30 years unilaterally for 49 percent of the value of the business. I am not a lawyer so these are just some ideas to discuss with your lawyer. The important thing is to retain ownership of everything, keep *your* name exclusively on the ownership papers of all properties (cars, rental agreements, buildings, etc), and have a way of dissolving the partnership if things go badly.
You need to speak to an attorney who specializes in these matters. You would legally set up the partnership, specifying ownership by percentages I believe, including all the what-if's that could happen (business folds, she sells out, you sell out, etc) in a contract.





I like the first answer. You can never be too cautious. And family matters can be terrible when things don't go well.





My wife's family operates a Chinese restaurant, and she says that her sister got involved (it is run by her brothers), and started being rude to customers and such, ruining business. It may be menopause or something, but still. Family can be a very touchy deal to work with.

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