I'm interested in bringing on a partner (for his development abilities) for a site I'm working on.
I already have an LLC and would prefer to keep this site under that LLC. Then, I'd offer in a percentage of ownership in the new site.
His concern is that in the event the site is acquired, he'd take an additional tax hit (personal income tax)...effectively doubling his tax liability.
So, is there any way around him having such a big tax liability?
Here is a clean approach...
setup an S Corp or a C Corp... (for yourself)
Have the developer do the same.
Then for each project setup its own independent LLC.
The S corps could own 50% of each LLC
So you could have:
and Developer INC
They both each own 50% of Project 1 LLC
and they each own 50% of Project 2 LLC
As those projects profit, their LLC funnels the profits upwards to their containing Corporation. The corporation can then offset the income with expenses or losses from other LLC's.
This keeps things fluid, and allows you to sell an LLC quickly.
It also provides a layer of protection of personal assets at the Corp level.
This is the model most property investors and real estate developers follow.
It can get expensive in LLC fees, but gives you some tax benefits.