Joining a LLC as an owner

[christo]

Hello,

My good friend started a small time lawn care business about 3 years ago. He registered as a LLC at the beginning of 2009. During the 2009 season I helped him with some accounts when he was busy and now we are discussing splitting ownership of the business 50/50. He is the only person right now that operates under the LLC and services approximately 20 accounts, both residential and commercial.

The problem I am having right now is that I am not sure how well he is keeping track of the finances and not real sure what his intentions are this tax season. If I agree to joining the LLC then I will be responsible for the organizing the finances, with the assistance of a CPA of course. He currently does not have an accountant or attorney.

My main concern that I am not sure of is if I were to become a half owner at the beginning of 2010 then would I be held responsible for any actions of the LLC prior to me joining? This is a good opportunity for me to make some extra cash but definitely not worth it to me if there was any unknown wrongdoing that I can be held responsible for.

If anybody could help answer this question or direct me to some resources I would be greatly appreciative.

Thanks!

[unkownfl]

I'm not 100% sure if a LLC is right for you guys. Normally a LLC is good for a single operator. If you want to 50-50 the company it is probably better to incorporate and issue shares.

[JFGauvreau]

Isn't LLC a corporation?

you could also go in a business with partnership, or a corporation with 50/50 shares

[Greg78]

LLC works well for partners. You need to talk with your accountant/lawyer about the pros and cons.

http://smallbusiness.yahoo.com/r-article-a-2679-m-4-sc-20-limited_liability_company_faq-i

[Greg78]

Isn't LLC a corporation?




No.

http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

[unkownfl]

If you are worried about back tax liability you will be fine. If you stay a LLC or go to INC you will have to get a new EIN to begin with anyway.

[Grass Shark]

Not to many happy endings with partners, every body told me this. I did not want to listen and got burnt 2 times. I said " no, he is like my best friend, he would not do that" HE DID!

[Daily Lawn/Landscape]

Run! Most partnerships end due to $ disagreements. I know of only 1 partnership that stayed together long term. I know of at least 13 that didn't work and the lastest to fail were 2 brothers that had workrd together for over 20 yrs. Started a business back in 2006 and parted ways by late 2008. They now both run seperate successful businesses.

James