Starting a Business With a Partner in Indiana? Agreements to Put in Place First

Going into business with a friend, family member, or colleague is exciting. It is also the moment when the most important legal decisions are easiest to make. Once money is coming in, or a disagreement starts, the same questions become much harder, and more expensive, to answer.

If you form an Indiana LLC without a written operating agreement that fits your deal, Indiana's LLC statute fills the gaps with default rules. Those defaults can govern who manages the company, how profits and distributions are divided, and whether an owner can withdraw. They may not match what you and your partner agreed to on a handshake.

Where partnerships usually break down

• Unequal contributions. One owner brings cash and another brings time, skills, or customers, and no one wrote down how each is valued.

• Control and deadlock. The owners disagree on a major decision and nothing says how a tie is broken.

• Pay and distributions. One owner believes they are owed a salary or a larger share for the work they do.

• Ownership of business assets. The name, website, software, or client relationships are tied to one owner rather than the company.

• Exits. An owner wants out, becomes disabled, dies, or stops contributing, and there is no agreed way to set a price or complete a buyout.

These are the situations behind many owner disputes. Our article on what to do when a co-owner refuses to sell or buy you out shows how difficult they can become.

Why a template is rarely enough

Online forms can produce a document, but they cannot tell you whether its terms fit your partnership, your industry, or your plans for growth. A poorly drafted agreement can create ambiguity or lock owners into terms neither intended. The right provisions depend on your contributions, your goals, and how you expect the business to change, and they need to work with your tax and accounting decisions, which should be coordinated with your CPA.

What a business attorney does for you

• Identifies the issues that matter most for your business and ownership structure.

• Explains how Indiana's default rules would apply if you leave them in place.

• Prepares an operating agreement and related documents tailored to your arrangement, including buyout provisions.

• Helps you plan for growth, new investors, and owner exits before they happen.

Signs it is time to call a business attorney

• You are about to file articles of organization with a partner.

• Owners are contributing different amounts of money, time, or property.

• A new owner or investor is joining an existing business.

• Your LLC has no written operating agreement, or one that no longer reflects how the business operates.

How Brinkley Law can help

Brinkley Law helps Indiana business owners with LLC formation, operating agreements, and business contracts. Attorney Sarah Brinkley can review your plans, identify the issues that need to be addressed, and prepare documents tailored to your business. At the start of any engagement, she will explain who the firm represents and when separate counsel for an owner may be appropriate. Learn more about our business law practice and see 7 legal essentials every new business needs.

Frequently asked questions

Does Indiana require an LLC to have an operating agreement?

Indiana's statute applies default rules when an operating agreement does not address an issue, and some important options are available only through a written agreement. An attorney can explain what your agreement should cover.

We already started the business. Is it too late?

No. Owners can adopt or update an operating agreement after the business is running, as long as they can reach agreement. It is usually easier while the relationship is going well.

Can one lawyer work with both owners?

Sometimes, but it depends on whether the owners' interests differ. An attorney will explain who the lawyer represents and whether each owner should have separate advice.

Talk with Brinkley Law

If you are starting a business with a partner in Indiana, put the right agreements in place before problems arise. Call Brinkley Law at 317-766-1379 or schedule a consultation.

Brinkley Law LLC, 8888 Keystone Crossing, Suite 1300, Indianapolis, Indiana 46240. Phone 317-766-1379.

This article provides general information about Indiana law and is not legal advice. Reading it or contacting Brinkley Law LLC does not create an attorney-client relationship. The application of the law depends on the facts of each matter.