Suggestions for partnership agreement

[GE]

Getting a few steps closer to owning my first airplane. I have a friend who
will be my partner and we plan on setting up an LLC to actually own the
plane. I don't know anything about LLC's, but I do want to have a
partnership agreement that spells out our financial responsibilities. Any
suggestions? Does anyone have a sample that I could look at? Thanks.

[Dude]

There are samples on the AOPA site. Take that as a start, talk with your
partner, and hire an aviation attourney to verify that the agreement says
what you want and offers the protection you want.

An ounce of prevention...


"GE" > wrote in message
...
> Getting a few steps closer to owning my first airplane. I have a friend
who
> will be my partner and we plan on setting up an LLC to actually own the
> plane. I don't know anything about LLC's, but I do want to have a
> partnership agreement that spells out our financial responsibilities. Any
> suggestions? Does anyone have a sample that I could look at? Thanks.
>
>

[GE]

Thanks for the heads up regarding the AOPA sight, I must have missed it over
there. Pardon my ignorance, but what is an aviation attorney and how does
one differ from a regular attorney? Where can I find an aviation attorney?

"Dude" > wrote in message
...
> There are samples on the AOPA site. Take that as a start, talk with your
> partner, and hire an aviation attourney to verify that the agreement says
> what you want and offers the protection you want.
>
> An ounce of prevention...
>
>
> "GE" > wrote in message
> ...
> > Getting a few steps closer to owning my first airplane. I have a friend
> who
> > will be my partner and we plan on setting up an LLC to actually own the
> > plane. I don't know anything about LLC's, but I do want to have a
> > partnership agreement that spells out our financial responsibilities.
Any
> > suggestions? Does anyone have a sample that I could look at? Thanks.
> >
> >
>
>

[Dude]

Just an attorney that keeps up with, and practices in the aviation area.
The law is so vast now that they all have to specialize.

There is one group at www.advocatetax.com but they seem to specialize in the
taxes. They often have stuff on their website that they post for others to
see (the owner is a plane nut).

The thing an aviation attorney is likely to be able to help with is drafting
a document that protects you all as much as possible from liabilities that
another may create in an accident or through financial or legal trouble.
Also, the agreement needs to keep you out of trouble with the FAA by not
creating a commercial operation by its wording.

Most lawyers likely have never even heard of the FAR's.





"GE" > wrote in message
...
> Thanks for the heads up regarding the AOPA sight, I must have missed it
over
> there. Pardon my ignorance, but what is an aviation attorney and how does
> one differ from a regular attorney? Where can I find an aviation attorney?
>
> "Dude" > wrote in message
> ...
> > There are samples on the AOPA site. Take that as a start, talk with
your
> > partner, and hire an aviation attourney to verify that the agreement
says
> > what you want and offers the protection you want.
> >
> > An ounce of prevention...
> >
> >
> > "GE" > wrote in message
> > ...
> > > Getting a few steps closer to owning my first airplane. I have a
friend
> > who
> > > will be my partner and we plan on setting up an LLC to actually own
the
> > > plane. I don't know anything about LLC's, but I do want to have a
> > > partnership agreement that spells out our financial responsibilities.
> Any
> > > suggestions? Does anyone have a sample that I could look at? Thanks.
> > >
> > >
> >
> >
>
>

[Robert M. Gary]

"GE" > wrote in message >...
> Getting a few steps closer to owning my first airplane. I have a friend who
> will be my partner and we plan on setting up an LLC to actually own the
> plane. I don't know anything about LLC's, but I do want to have a
> partnership agreement that spells out our financial responsibilities. Any
> suggestions? Does anyone have a sample that I could look at? Thanks.

Be careful. In some locations the LLC has a minimum franchise tax. In
CA you pay a minimum of $800/year in state tax for the right to have
the LLC. If you create the LLC out of state you pay a use tax of
$800/year (they get you either way). You can fill out a form to
request an exception as not-for-profit but it takes a very, very long
time to get a response and you need to pay the taxes in the meantime.
It may or may not be the same where you are.

However, if you don't do the LLC you will be regarded as "partners" in
the legal sense. Anything your partner does related to the airplane
can create liability for you. This includes things not covered by your
airplane insurance like driving to the airport.
Also, make sure you have good articles. Whether you are "partners" or
an LLC, the other guy can create debts against you unless you have
something written up otherwise.

I've owned my Mooney in a C-corp with a partner for several years now
and I can't imagine owning a plane myself ever. Between the two of us
we keep it flying enough. Unless you really think you will put more
than 100hr/year on a plane you really shouldn't own it yourself.
Now we're looking at adding an L-2 to our line.

-Robert

[David Megginson]

Robert M. Gary wrote:

> Be careful. In some locations the LLC has a minimum franchise tax. In
> CA you pay a minimum of $800/year in state tax for the right to have
> the LLC. If you create the LLC out of state you pay a use tax of
> $800/year (they get you either way). You can fill out a form to
> request an exception as not-for-profit but it takes a very, very long
> time to get a response and you need to pay the taxes in the meantime.
> It may or may not be the same where you are.

How difficult and expensive is straight-forward incorporation in the U.S.
(i.e. not an S-corp or an LLC -- is that what you mean by a C-corp?)? In
Ontario, Canada, it costs a bit over CAD 200 (USD 150) to set up a federal
corporation online, including the name search -- you pay by credit card, and
if there's no name conflict the federal government e-mails you the articles
of incorporation in PDF format a few hours later. Unless the corporation
collects sales tax or makes a profit, the only other fees are CAD 20/year
(about USD 15/year) for filing the annual corporate information return
online, and whatever you pay at Staples for some blank paper and a binder to
keep the articles and minutes.

If it's similar in the U.S., perhaps that would be a better choice than an LLC.


All the best,


David

[Victor J. Osborne, Jr.]

AOPA has a list they use for their legal plan.

I had an accident last year and they gave me a list from nearby Knoxville.
The attorney I talked with is a pilot and is experienced in aviation issues.

Thx, {|;-)

Victor J. (Jim) Osborne, Jr.



take off my shoes to reply

[Robert M. Gary]

David Megginson > wrote in message .com>...
> Robert M. Gary wrote:
>
> > Be careful. In some locations the LLC has a minimum franchise tax. In
> > CA you pay a minimum of $800/year in state tax for the right to have
> > the LLC. If you create the LLC out of state you pay a use tax of
> > $800/year (they get you either way). You can fill out a form to
> > request an exception as not-for-profit but it takes a very, very long
> > time to get a response and you need to pay the taxes in the meantime.
> > It may or may not be the same where you are.
>
> How difficult and expensive is straight-forward incorporation in the U.S.
> (i.e. not an S-corp or an LLC -- is that what you mean by a C-corp?)? In
> Ontario, Canada, it costs a bit over CAD 200 (USD 150) to set up a federal
> corporation online, including the name search -- you pay by credit card, and
> if there's no name conflict the federal government e-mails you the articles
> of incorporation in PDF format a few hours later. Unless the corporation
> collects sales tax or makes a profit, the only other fees are CAD 20/year
> (about USD 15/year) for filing the annual corporate information return
> online, and whatever you pay at Staples for some blank paper and a binder to
> keep the articles and minutes.
>
> If it's similar in the U.S., perhaps that would be a better choice than an LLC.

It depends on the state. In general the difference between a C-corp
and an LLC is the paperwork. A C-corp must report officers each year
to the state and you must hold board of director's meetings and have
notes. If you fail to do one of these someone can "pierce the coporate
veil" by saying you were not really a C-corp. In either case you need
to isolate the money, have a specific checking account, etc. If you
co-mingle money, the LLC or the corp will be pierced pretty quick.

In California the costs depend on what type of C-corp you want. A
mututal benefit corporation can be had for $35 (plus the paperwork of
putting together the articles of incorporation). I believe a
for-profit C-corp is around $200 filing fee.

However, in CA you must also pay $800/year minimum franchise tax. This
is the same for mututal benefit corps, LLC, out of state corps, etc.
The only way around this is to fill out another form requesting state
exception because you are not-for-profit (please note that
not-for-profit is in no way related to chartity or in anyway related
to being an IRS exempt corp).
Once you get that letter (about 12 months out) you can stop paying the
minimum $800/year tax. You don't really need do to anything with the
feds because the feds don't expect taxes to be paid unless you make
money or pay saleries, etc.


In all of this there is only one part that is very easy, can be done
in real time over the internet, and does not cost anything. That part
is getting the tax-payer ID number you'll need for your forms and back
account. If you want to save money, expect months and months of
paperwork, but if you just want a number so you can pay money, it
happens right away! :)

-Robert