I have heard many many people say that when starting a company, you should always get plenty of tax and legal advice. Good advice of this kind is not cheap, and thus many entrepreneurs scrimp on it because they think they cannot afford it. The truth is, they can't afford not to.
Today I had a lawyer review the operating agreement for the company I am forming. My business partner will be the majority shareholder, and thus has significantly more leeway in decision making than I do. I read through the agreement on my own, and found a few minor points I wanted changed, but I missed a big one. The lawyer pointed out today that if three certain things happened in the right order, it is possible for my partner to force me out with nothing more than my initial investment -even if we are wildly successful. I don't think that was his intent, and he probably doesn't realize he can do that. His lawyer probably wrote the document to protect him as much as possible, and this potential scenario is just a side effect of that. I don't care much for rules, but there is one I always abide by in life – don't trust ANYONE when it comes to money. I don't even trust myself. So while I doubt this scenario will ever manifest itself, I have asked for clauses to be inserted that protect it from happening to me. Sure I spent several hundred dollars that I would rather have used for other things, but that is nothing compared to peace of mind. So those of you who hope to go down this path someday, remember that when starting a business, good advice is worth it – whatever it costs.