Family Business Agreement

[fantasymaker]

My Son is a great salesman, He has a real knack for buying and selling autos and equipment. He has been making a good living this way for years.
He is looking for a new revolving credit source( floor plan).
I have been looking for a place to make a investment of about the same size, spo it would seem to make sence to invest in my son. I belive in him and his abilites.
Yet this is a business deal.
how would you go about structureing the business agreement .
The basics.
I'll make $1-200,000 available to him to purchase inventory.
as he sells inventory we will split the profit 50-50.
He wants 51% of the business so that he is assured of buying the stuff he wants and not getting stuck with stuff he cant sell. I have no interest in telling him what to buy or for how much I really think that knowlage is his most valuable asset but I want to be able to control my money so it cant simply taken for his personal use if things were to get bad between us so I want a 50-50 arrangement.
Another thing on my mind is he is really good at this so what happens when he has put $100,000 of his own away and no longer needs my money and yet its my seed mony that built the company? I can see anyway to hold him in the company against his will and am not sure I would want too.
Any thoughts on how to write this up and organize the company?

[Wolf mom]

I'd take the "son" out of the equation and ask yourself how would you structure it if he were a business associate. Hire an atty or go to the SBA.

I've heard the worst people to go into business with is family...You're already being cautious (have a little doubt) by saying you don't want him to take it for personal use

[fantasymaker]

Exactly right wolf mom Im looking to structure this just as I would with any other partner. You have to trust someone to go into buiness with them but you still cover your ass-sets against posabilities.

[Shadow]

Loaning money to friends is a sure way to lose money and friends. You can get more friends but loaning money to family is a sure way to loose money and family, do you want to lose part of your family. Don't do it.

[justmyluk]

See if you can follow me on this...

1. Go to a bank and place $200,000 in a money market account or high yield "CD" in "YOUR NAME ONLY".

2. Now take your son to the same bank and co-sign line of credit for him for $200,000 using "YOUR" $200,000 "CD" as collateral (any bank will make this loan without question because it is secured with money in the bank)

Are you with me so far...

The results:

3. Your "CD" is drawing interest at the bank and is being deposited into "Your" account.

4.Your son gets to build his credit thru the payback of the loan to the bank and makes a good living in the process.

5. You don't have to keep up with withdraws and deposits to your account like you would have if you let him use "Your" money.

The only drawback is the same as if you were to lend him the money yourself...If he doesn't pay the bank back, they take your "CD"

In a few years if he establishes good credit with the bank, they will release your "CD" from the loan and everybody would make money.

You make money...Your son makes money...The bank makes money...

EVERYONES HAPPY

And you don't have to worry about getting an attorney involved or drawing up a contract... The bank takes care of that for you...

Just thinking out loud. (shhhhhh...don't tell anyone I use to work for a bank)

[fantasymaker]

One point of this is to be in business togather. You know Fantasymaker and Son on the sign.(His side gets FM Jr and Dad)