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Do you want to go into business with your family?

Starting a new business can be scary and fraught with peril. It can also be exciting and invigorating. Choosing your business partners can be a complex and difficult process, and for many, having a family member as a partner on your team can be an easy decision and rewarding. However, it is not without its own risks.

As with anything in life, the key is recognizing those potential issues and planning for them in advance. Then, should anything go amiss, you will not be in the position of trying to assemble a parachute after you have jumped from the airplane.

With a parent, sibling or child in the business with you, you can make certain assumptions. You know they have your back and you have theirs. You can truly feel a sense of working together and building something together.

But at the same time, you need to create rules, preferably before you open for business, the set the proper expectations and puts forward an understanding that everyone will be on the same page and be held accountable to the same set of rules.

While it may be your family business, it is not your family, and it is vital that you build a structure, whether it be a formal partnership, corporation or limited liability company, and draft a set of corporate articles and bylaws, a partnership agreement or operating agreement.

And as important as setting up these formal operational document is ensuring that everyone adheres to them. The businesses bank accounts and credit cards are not extensions of your personal accounts.

Decisions on hiring and firing need to be formal and clearly delineated. How the business spends money needs careful control, preferably with enough oversight that all decisions are transparent and they do not sow the seed of dissension or litigation.

Operating a business with your family can be a tremendously rewarding experience, and creating a strong foundation is a good way to help it stay that way.

Source: business.com, " Pros and Cons of Having Family Members for Business Partners," Adam Toren, March 9, 2016

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