Posted: 8/13/2025 1:37:32 PM EDT
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I've been in talks with friend about starting a small business together in the motorcycle industry. Over the past few months as we have talked about this business it was revealed by my potential partner that he was convicted of conspiracy to commit wire fraud and served 2 years for this conviction. This conviction stemmed from a previous business he was part of and his sentence was reduced for cooperation with the prosecution. This potential partner has interested investors and has done a lot of preliminary work on the concept and development of the product. Due to his past he has separated himself from the legal ties to our potential business by having his wife form an LLC and essentially putting her and myself as owners/president. This step was deemed necessary to alleviate any concerns the investors might have (these investors are well aware of his conviction and history). I have known this guy for a year and he has been very forthcoming with me about his intent and history. We have a good personal relationship. If I were to go into business with this person, what are some steps I could take to prevent myself from being left holding the bag (investors money) should the business fail. Obviously I would want and attorney to advise me on any legal docs and proceedings (not sure what kind of attorney I should employ for this). Any suggestions from you that I could use to protect myself and my assets in this potential business? |
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First of all, don't start the business. The motorcycle market is simply not big enough in the US to launch anything meaningful, and it's too cheap in most of the ROW. I say this having brought products from idea to market in bicycles/e-bike, power sports, off-road and automotive. Scooter is actually much better globally if you can get cheap enough. Maybe you have some sort of safety gear idea that will apply to all two-wheel? IDK, all I can tell you is that motorcycle and snow machine in the US are two really fun-sounding markets that simply don't have the volume to support much of interest. Anything you do for them needs to have applications elsewhere. Of course this doesn't directly apply if all you're doing is setting up a dealership or importing something. Second, a LLC is a pass-through entity. You need to look very closely at things that can create a tax liability for your investors. Early stage and business start-up investors are, or should be, if they have a clue, prepared to lose their investment. However, your buddy can make a profit that he keeps, and the LLC can create a tax liability for your investors without them ever seeing a dime. He can do that to you, too. Ask me how I know.  That will piss people off. I'd strongly suggest you look at an S corp at minimum, and more appropriately a C-corp if you are going to take on investors. S corp is also pass-through, but I think there is a means to isolate investors in it, check with an attorney or tax accountant. |
| I know nothing about starting a business, I do know I'd never start a business with someone convicted of a serious crime, in this case fraud. He did it once he will do it again. Just my humble two cents FWIW. |
My wife says I'm totally useless..that's not true.. I can be used as a bad example
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You never explained what your role would be? Sounds like he’s got investors, his wife is covering up his felony from the state, IRS, licensing depts… You the fall guy? Subject expert? Or just some lucky friend he chose to start a business with? |
What is a democrat? Someone who wants everything you have, except for your job.
Politicians should wear uniforms like NASCAR drivers so we could see their corporate sponsors.
Politicians should wear uniforms like NASCAR drivers so we could see their corporate sponsors.
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I've been in small business for 30 years. 1. You don't need a partner. 2. You especially don't need a partner who has done time for any form of fraud. 3. You extra especially don't need a partner who has previously worked with the DA against his former partner. Run. |
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Originally Posted By ManuForti: I've been in small business for 30 years. 1. You don't need a partner. 2. You especially don't need a partner who has done time for any form of fraud. 3. You extra especially don't need a partner who has previously worked with the DA against his former partner. Run. As someone also in business for 11yrs now... I totally agree with this advice. I started with a business partner (friend), one piece of advice I received from a business coach early on and has always stuck with me... "Figure out your differences now, and work through them before your bank account has a bunch of zeros behind it" Sage advice. I ended up buying out my partner before the business grew. Now, looking back all these years, I am glad I don't have a partner. There can only be one chief in my opinion. |
What is a democrat? Someone who wants everything you have, except for your job.
Politicians should wear uniforms like NASCAR drivers so we could see their corporate sponsors.
Politicians should wear uniforms like NASCAR drivers so we could see their corporate sponsors.