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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience:  Solicitors 2 years plus PQE
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I am about to setip a busss with a freind and want to know

Customer Question

I am about to setip a busss with a freind and want to know wheteher to create a LLP or LTD company. We have published a digital interactive technical manual on the Boeing 737. We are both pilots. I am thinking of employing my girlfreind who would be in charge of sales, but tghis may have to come from my half of the profits. The business would be 5050 with my friend but as he has written the most part of the manual we both agree that he retains copyrights. Also, as there are only two people oin the business how would decisions be made. My friend has asked for the controlling decsion which I agree to. How would this work and be written in toe contract? How do I go about setting up the company. Is there something I can take off the shelf? Thanks
Submitted: 12 months ago.
Category: Law
Expert:  Alex J. replied 12 months ago.
Hi, Thank you. My name is ***** ***** I will assist you. How much do you anticipate this making? Is the business essentially selling a licensed service? Are you investing any money into this business?
Customer: replied 12 months ago.

No money invested in. The manual is already written. It is an online book that people can use as a learning tool. I hope that this will be sucessful and that we sell atleast 100,000 copies at around £25 per copy.

Expert:  Alex J. replied 12 months ago.
Thank you. Both LLPs and Limited Companies are easy to form - they can be incorporated online (https://www.gov.uk/register-a-company-online https://www.gov.uk/set-up-and-run-limited-liability-partnership/register-your-llp) and it can be done within 24 hrs.Each has different advantages and disadvantages.Both are distinct legal personality, ie they can enter into contracts, incur debt and own property.A company is probably is more suitable if you looking to build up a business you can sell in the future as an asset. What you are proposing - the main asset used by the business (i.e the manual) will not belong to the business but will be licensed to the business - therefore the main focus of the business is to just generate an on going income, not something that you are likely to sell or float at the end. With an LLP you have to flexibility to set profit drawings or share profits with your partner in what ever proportions, this will be easier to do with an LLP because it has a much lower administrative burden (i.e far fewer statutory filings). All profits from an LLP are taxed as income, as opposed to a company which has corporation tax on its profits, the profits of a company are then drawn as dividends and will be subject to income tax. I would recommend that you obtain some personal tax advice as well when making your decision. As discussed.Overall an LLP is probably far more flexible for the needs you require and is far more suitable for just selling what is essentially a service.In terms of decision making either with a company or an LLP you would have a shareholder agreement or partnership deed - in this you could create a method for decision making, and include a dispute resolution mechanism whereby a third party decides on any deadlocked matter.Will you both be providing the same skills to the business? Essentially sales of the product?
Customer: replied 11 months ago.

Thanks for the reply. Yes we will from this point be generating sales. Although my friend produced the manual, hence retaining ownership. I cannot foresee selling the business in the future. If it is successful it will generate a steady income but very unlikely someone would wish to buy the rights for a considerable amount of money. But if the did, presumably it the copyrights were owned by my friend he could do this at anytime without the business?

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. If someone wanted to buy the business they would essentially only be buying the goodwill and trading name, and a license to use the manual. Therefore it is key to understand on what terms your friend is prepared to license the manual to the company? Will be a fixed license? Will it be global? Will it be exclusive?
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
Alex J. and 2 other Law Specialists are ready to help you
Customer: replied 11 months ago.

Is there a way for him to retain the coyright so that he has authority but allows to company exclusive rights to selling the manual?

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. Yes this would have to be done under an exclusive licence. Have you discussed the terms of a licence? Kind regards AJ
Customer: replied 11 months ago.
No. Something we need to discuss. What options are there? How can we write it in to the contract?
Expert:  Alex J. replied 11 months ago.
Hi, Thank you. The license will need to be between the company or LLP and your business partner. The first thing you therefore need to do is form the entity that you intend to use. Have you made a decision on this? Kind regards AJ
Customer: replied 11 months ago.

We have agreed that we will form a business partnership together. He would like to have the majority vote. But I don't know how this stands if he decides he would like me to leave the business? He would also like to retain the copyrights of the manual but I am unsure if the business retains the rights to sell how this stands.

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. The copyright would have to be licensed to the business partnership. He would retain ownership of the copyright subject to the license. If the license terminated for any reason the copyright in the manual would revert to him. Kind regards AJ
Customer: replied 11 months ago.

Ok That sounds ideal. Are you able to assist me in a short paragraph that I could write in to the LLP to achieve this. Also, how to word the control of the partnership giving him the deciding vite but not allow either to be terminated from the business.

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. When the LLP is formed, you will need an agreement between the LLP and your business partner to license the manual to the LLP. Have you got an LLP agreement?
Customer: replied 11 months ago.

I have an LLP which we are about to sign. It is one that I have taken from a business I had in the past which was an internet business.

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. If you want the licence to be included in an LLP agreement then you will need an LLP agreement to start with. Do you have a template? You may be able to find one on simply docs for example?
Customer: replied 11 months ago.

I do have one already. Is that something you would be able to look at for me?

Expert:  Alex J. replied 11 months ago.
Hi Thank you. I will review this and revert to by tomorrow. Kind regards AJ
Expert:  Alex J. replied 11 months ago.
Thank you. If you want to include a license in this agreement from the manual owner to the LLP, then the LLP will need to be listed as a party to this agreement. Also do you have a detailed description of the manual or can it be annexed to the agreement? Kind regards AJ
Customer: replied 11 months ago.

Ok. So the manual owner writes a contract to say that the LLP has exclusive rights to sales and the LLP being both my partner and I have to have agree on this in writing. Is that correct?

The manual: Is called "The Ultimate B737 NG Technical Handbook". It is a technical handbook designed for pilots both new to the aircraft and pilots who are currently flying the Boeing 737 as a revision or refresher tool.

Customer: replied 11 months ago.

Ok. So the manual owner writes a contract to say that the LLP has exclusive rights to sales and the LLP being both my partner and I have to have agree on this in writing. Is that correct?

The manual: Is called "The Ultimate B737 NG Technical Handbook". It is a technical handbook designed for pilots both new to the aircraft and pilots who are currently flying the Boeing 737 as a revision or refresher tool.

Customer: replied 11 months ago.

How do I create a licence agreement? Could you help me with this?

Expert:  Alex J. replied 11 months ago.
Hi, Thank you. I am afraid we cannot draft documents of this site. As long as the intellectual property (i.e the manual) can be clearly identified then a licence should be fairly straight forward. I would suggest that you get a solicitor externally to draft this, as they have the benefit of professional indemnity insurance in case any thing goes wrong - you can find a local solicitor here www.lawsociety.org.uk - I am happy to assist with any questions that you may have on the process?

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