what type of entity for joint venture?

[ryanpal]

i'm partnering with an associate to purchase notes from banks. we both have llc's but it was mentioned to create a separate llc in which we are both 50% partners.

should we do this or create some other type of partnership that incorporate both our existing llc's?

 

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[John C.]

I'm not an attorney so cannot give legal advice. What would be the purpose of a separate entity? Is there any potential liability from this? If you buy notes will you/the entity be doing the collection from the debtors?

If you are going to be trying to collect on the notes, I can see the benefit of having a separate LLC set up as the owner. You as an individual are removed from the picture.

If this is very successful, you might want to take in additional investors, so a separate LLC would be helpful. If there are going to be expenses of collection that one or both of you might have to pay, then having a separate LLC makes it easier to keep the records straight and in one place.

If you might have to sue to recover on some of the notes, having a separate LLC would be helpful.

I think you need to think through the operation and get a clear picture of what types of activities might take place and then let that guide you. I would opt for an LLC over a regular corporation or a partnership.

 

[CVentures1B12]

I am also not a lawyer but I just have a question.

If you both had LLCs before you met/started this business, wouldn't you want to keep them separate since you have other interests? Personally, I love the LLC (at least in TN). It is easy for taxes, easy for upkeep, provides more protection than some other entities with the tax benefits of a corporation. It's cheap enough here to create one for every separate venture that you take on.

JC