Q: Should we open an LLC or LLP for our trading card business?

A: You should meet with an experienced business attorney and a CPA to discuss this before you just choose an entity type (LLC v LLP v S Corporation) and have a 50/50 partnership. I am generally not a fan of 50/50 ownership unless you have very clear documentation on how you terminate or get out of a 50/50 entity. And questions about how and when both of you (or one of you) get paid to conduct the business may impact LLC versus other entity choices. Take the time to address these issues before you choose an entity type and ownership shares to avoid potentially big issues down the road when you both may no longer be in agreement.

A: Based on your structure and goals, forming an LLC is likely the better fit for your trading card business. An LLC offers flexible management, protects both of you from personal liability, and works well for two-person partnerships. You can easily split ownership 50/50, open a joint business bank account, and file taxes either as a partnership or with pass-through taxation by default.

An LLP is typically used by professional groups like lawyers or accountants and may not be recognized in your state for general retail or trading card businesses. Also, an LLP doesn't always provide the same level of liability protection for all partners, depending on how your state structures it. Since you both intend to be equally involved, an LLC with a written operating agreement will clearly define roles, responsibilities, and how profits or losses are handled.

Keep your business simple and protected as it grows. Set up your LLC, register with your state, and make sure your operating agreement covers how decisions will be made, how funds are distributed, and what happens if one of you exits the business. Building a strong foundation now can save you from major issues later.