TAS 153 3 Things You NEED to Know about Partnerships (The Good and Bad)

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  • Hi Scott
    Just listened to this podcast. Might offer some advice based on personal experience. In order to avoid the pitfalls of partnerships, it is better to set up a C corporation (the 1% where it is advantageous). Each partner holds 49% of the voting stock, and you get a 3rd party that you mutually agree on (either your CPA, attorney, or business person whose judgment you respect) to hold the other 2% in trust. When you have a dispute that you cannot reconcile between the two of you, you set up a meeting with your trusted 3rd person and he breaks the deadlock.

    Secondly, have your attorney draft a Shareholder’s Agreement that covers situations like the sale of the business, or death of one of the partners. This is very important. If your partner dies, and you have no agreement, you could end up with a family member of your dead partner as co-owner of the business, which is usually less than desirable. Also, be sure to include a “shotgun clause” in the Shareholder Agreement. Ask your attorney what that entails.

    This is the most effective method to deal with partnerships. My father did it for years and I have been doing it for the past 16 years.

  • Hey Scott! Great episode! Thank you. I have a question for you:

    As of right now, I have an active FBA business with a business partner (we share an account) I have 2 accounts with Amazon and they gave me permission for this.

    I’m currently looking to start a new PL line with a different business partner, but I would like to use a new account under his name to do this.

    If we both accessed this account, would Amazon consider this a violation as far as you understand it? Do you think we would be better off using my existing 2nd account? I’m a little hesitant to use this account because it was an RA account and to be honest it has a couple of bumps and bruises.

    Any advice would be greatly appreciated,

    Thanks again for all of your great material!

    • Hey Travis, you would simply need to reach out to Amazon and get permission to have another account (just like you did before). That shouldn’t be a problem as long as you have a legit business reason!

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