Choose this if your deal is about setting up a new company for a joint venture business.
It can be helpful to include prices in your Letter of Intent if you want to create an expectation with the other party about how much will be paid for the services.
If you want to leave it open for now and negotiate on price, then leave out pricing for now.
A deposit can encourage the other party to go ahead with the deal. Also, if you will be incurring expenses while you negotiate the deal (e.g. ordering demos of a product), you may want to collect a deposit to cover your costs.
Sometimes it can be helpful to include a timeline that everyone should have in mind to keep the deal going. This helps to keep the negotiations on track and honest.
For example, you could say that the first version of an app or draft proposal will be ready by May 1st, a prototype product will be ready by June 1st, and you intend to sign a final agreement by July 1st.
A "No-Shop" promise is an agreement that neither party will see if they can get a better deal elsewhere while you are negotiating together. So, during the time that you're working together to negotiate a deal, you're exclusive and won't see what else you can find on the market.
You'll need a Confidentiality Agreement to make your Letter of Intent confidential. Here's a link to where you can make one (opens in a new tab, you won't lose your spot): Confidentiality Agreement
A Letter of Intent is meant to sketch out a deal that you're negotiating and pin down the main points you will agree to. When you're done negotiating, you create a final agreement that is binding and makes your deal official.
Since you're still in the negotiating phase, you can put an expiry date on the Letter of Intent. After this date, the points you've agreed to are no longer open for acceptance. Also, anything you've put in the Letter of Intent to protect you (like confidentiality or no-shop clauses) end.
Being a sole proprietor means you haven't incorporated and are doing business in your own personal name.
Use this one if you've formally incorporated your business.
A limited partnership is a formal legal entity, just like a corporation. You have limited partners and a general partner.
A general partnership is a formal legal entity, just like a corporation. There are no limited partners, just two or more general partners.
Sole proprietors usually operate their business under a trade name. For example, if your name is Tony Stark and you're a sole proprietor, you might be calling your business Stark Consulting. So, what name are you using for your business?
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A business partner is someone (a person or another company) that is going to be operating the business with you. They could be a co-founder, another business that compliments yours in some way that's joining you on a project, or a strategic partner that you're starting a completely new business with. They may also be, and many times are, part owners of the business. Whatever their role, like you they are actively working to grow and operate the business.
An investor is someone who contributes money or other resources to your business in exchange for owning a part of your business. Investors can be active by giving advice and voting on major business decisions. Investors can also be passive by just giving money or other resources, but only expecting a return on investment and not playing an active role in the business by giving advice or deciding on major business decisions.
A passive investor is one that wants to leave the business and management decisions to you. So, a passive investor provides funds and expects a return on investment, but lets you run your business. They may want to be updated from time to time of course, and they might vote on things like who gets to be on the Board of Directors or a Management Committee, but otherwise they are mostly quiet and let you go about your business and don't take an active part in your operations.
Most common type of business
A Corporation could work great for you.
A general partnership could be suited to what you need right now.
A Limited Partnership could work for you.
Limited Partnerships are made up of Limited Partners and at least one General Partner. The Limited Partners are called "limited" because they are not fully liable for the debts and obligations of the partnership. In other words, they have limited liability. But that limited liability is not perfect - there is a big exception.
The Limited Partners are only protected from liability if they are not taking an active role in the operations of the partnership. If they do, they become fully liable for the partnership's obligations and debts.
The General Partner is the one in charge of managing the business and operations of the partnership. Since it takes on that role, the General Partner is also the one liable for the debts and obligations of the partnership.
All of this means that Limited Partnerships are better suited for a passive investment style with investors coming in as Limited Partners and providing money and resources to earn a return on investment, and the General Partner being the one making the business decisions and managing the operations.
Since your other partners/investors will be, or want to be, actively involved in the business, a Limited Partnership doesn't sound like a good match for you.
You could go into business as just you. We call that being a "Sole Proprietor". But, it isn't typically recommended.
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