Legal Considerations When Going into Business with Family or Friends
January 9, 2025

Starting a business is exciting—but starting one with family or close friends adds an extra layer of trust, enthusiasm, and shared vision. It can also add risk.


At Deppman Law PLC, we often meet clients who enter into business partnerships with loved ones only to discover later that good relationships don’t always guarantee good business outcomes. The key to maintaining both a healthy business and a healthy relationship is clear communication—and proper legal planning.

Here’s what every Vermont entrepreneur should know before launching a business with people they care about.

 

1. Treat It Like a Business—Because It Is One


It’s tempting to assume that a handshake and a shared dream are enough when starting a business with someone you trust. But even the closest relationships can fray under the pressures of ownership, money, and decision-making.

The best way to preserve those personal relationships is to approach the business professionally from the very beginning. That means forming the appropriate legal structure, outlining each person’s role, and addressing key “what if” scenarios while everyone is still on the same page.

 

2. Choose the Right Business Structure


The structure you choose affects everything from taxes and liability to decision-making authority. If you’re forming a business with others, you’ll likely be considering one of the following:


  • Limited Liability Company (LLC)—Offers flexibility and personal liability protection. You can customize roles and responsibilities in the operating agreement.
  • Partnership—Easier to form but comes with shared liability unless limited protections are added.
  • S Corporation—May offer tax advantages but is more complex to set up and maintain.


Each has its pros and cons, and the right fit depends on your goals, risk tolerance, and financial picture. An attorney can help you weigh the options.

 

3. Draft a Detailed Operating or Partnership Agreement


This is the most important legal document for any co-owned business—and often the most overlooked when working with family or friends. A good agreement will clearly spell out:



  • Ownership percentages
  • Capital contributions (Who is putting in what money or resources?)
  • Roles and responsibilities
  • Decision-making authority
  • How profits (and losses) are divided
  • What happens if someone wants out or passes away
  • How disputes are resolved


It may feel uncomfortable to talk through these scenarios at the start, but it’s far more difficult—and costly—to address them later without a written agreement in place.

 

4. Plan for the “What Ifs”


Every business faces bumps in the road. You and your co-owner(s) may not always agree on the direction of the business, hiring decisions, or how to reinvest profits. That’s why it’s so important to build in mechanisms for resolving disagreements before they escalate.


Also think about:


  • Exit strategies—Can one partner buy out the other? On what terms?
  • Divorce or inheritance—What happens to an ownership share if a partner gets divorced or passes away?
  • Disability or loss of capacity—Will there be a buyout or a transfer of management duties?


A little planning now can save your business—and your relationship—later.

 

5. Maintain Boundaries Between Personal and Business Finances


Mixing business and personal finances is one of the fastest ways to create confusion—and legal trouble. Even when working with loved ones, treat the business like a separate entity:


  • Set up a business bank account.
  • Document loans or capital contributions in writing.
  • Pay yourself and your partners through proper channels.
  • Keep clean records for tax and liability purposes.


This helps reinforce professionalism and provides a clear trail if financial questions arise.

 

6. Don’t Skip Legal and Financial Advice


Too often, people assume that involving lawyers or accountants will “complicate” a friendly business venture. In reality, professional guidance ensures you’re setting the business up for success. It helps you prevent problems—rather than clean them up later.


Protect the Business and the Relationship—Talk to Deppman Law PLC


Going into business with family or friends can be incredibly rewarding, but it takes careful planning and honest conversations to keep both the business and the relationship strong. At Deppman Law PLC, we help Vermont entrepreneurs navigate the legal steps to set their partnerships up for success. Contact us today to schedule a confidential consultation and learn more.

How to Protect Your Business in Vendor and Service Agreements

March 16, 2026
Vendor and service agreements are a routine part of running a small business, but they are also one of the most common sources of legal disputes. Whether you are hiring a vendor, providing services to a client, or entering into a long-term business relationship, a well-drafted agreement is essential to protecting your interests. Taking the time to get these contracts right on the front end can prevent costly issues down the road. Scope of Work At its core, a vendor or service agreement should clearly define the scope of work. This includes what services or goods will be provided, the timeline for performance, and any specific deliverables. Vague or overly broad descriptions can lead to misunderstandings and disagreements about whether obligations have been fulfilled. The more specific the agreement, the easier it is to hold all parties accountable. Payment Terms Payment terms are another critical component. Your agreement should outline how much will be paid, when payments are due, and what happens if a payment is late or not made at all. For service providers, this may include requiring deposits or including interest or penalties for late payment. For businesses hiring vendors, it is equally important to ensure that payment is tied to satisfactory performance. Liability Limits Limiting liability is also key to protecting your business. Many agreements include provisions that cap the amount of damages one party can recover or exclude certain types of damages altogether. While these clauses must be carefully drafted to be enforceable, they can significantly reduce your financial exposure in the event of a dispute. Similarly, indemnification provisions can require one party to cover certain losses or claims, such as those arising from negligence or third-party actions. Disputes Another important consideration is how disputes will be handled. Your agreement should specify whether disputes will be resolved through litigation, mediation, or arbitration, as well as the location and governing law. For Vermont businesses, including a clause that applies Vermont law and designates a local venue can provide greater predictability and convenience if a dispute arises. Termination Termination provisions are often overlooked but can be just as important as the initial terms of the agreement. A strong contract will outline when and how either party can terminate the relationship, including for cause (such as a breach) or for convenience. It should also address what happens upon termination, such as final payments, return of property, or transition of work in progress. Confidentiality In addition, businesses should consider including provisions related to confidentiality and intellectual property. If sensitive business information is being shared, a confidentiality clause can help prevent misuse or disclosure. If the agreement involves the creation of content, designs, or other work product, it should clearly state who owns that work and how it can be used. Finally, it is important to ensure that all agreements are properly executed and reflect the actual understanding of the parties. Relying on informal arrangements or handshake deals can leave your business exposed if a disagreement arises. Even when using templates, contracts should be reviewed and tailored to fit the specific transaction and applicable law. Contact Deppman Law PLC For more information about drafting or reviewing vendor and service agreements, contact Deppman Law PLC. Our team can help you create contracts that protect your business and support your day-to-day operations with confidence.

What to Expect at a Vermont Real Estate Closing

February 11, 2026
Buying or selling real estate is one of the most significant financial transactions most people will make, and the closing is where everything comes together. While the process can feel intense, understanding what to expect at a Vermont real estate closing can help you feel more prepared and confident on the big day. In Vermont, real estate closings are typically handled by an attorney or title company, and the process is often more attorney-driven than in some other states. Whether you are buying or selling, your attorney plays a central role in ensuring that the transaction is legally sound and that your interests are protected throughout the process. Leading up to the closing, several important steps take place behind the scenes. One of the most critical is the title search. This involves reviewing public records to confirm that the seller has clear ownership of the property and that there are no outstanding liens or legal issues that could affect the transfer. If any issues are discovered, they must be resolved before closing can proceed. At the same time, the buyer will typically finalize financing, secure homeowners insurance, and review the closing disclosure, a document that outlines the final terms of the loan, as well as all costs associated with the transaction. It is important to review this document carefully in advance so there are no surprises at closing. On the day of closing, the parties will meet—either in person or, in some cases, remotely—to sign the necessary documents. Buyers can expect to sign a number of documents related to their mortgage, including the promissory note and mortgage deed. Sellers will sign documents transferring ownership of the property, most notably the deed. In Vermont, the deed is often a warranty deed, which provides assurances to the buyer that the seller has clear title to the property and the legal right to transfer it. Along with the deed, various affidavits and tax forms are also executed to complete the transaction. Funds are also exchanged at closing. Buyers will provide the balance of their down payment and closing costs, typically via wire transfer, while the lender provides the loan funds. The closing agent then distributes these funds to the appropriate parties, including paying off any existing mortgages, covering taxes and fees, and delivering the remaining proceeds to the seller. Once all documents are signed and funds are disbursed, the final step is recording the deed in the local land records. This officially transfers ownership of the property to the buyer. In many cases, the buyer will receive the keys to the property shortly after this step is complete. While most closings proceed smoothly, issues can arise. Delays in financing, title defects, or last-minute changes to terms can all impact the timeline. Having experienced legal guidance can help address these challenges quickly and keep the transaction on track. Ultimately, a Vermont real estate closing is a structured process designed to ensure that ownership is transferred properly and that both parties’ rights are protected. With the right preparation and support, it can be a straightforward and even rewarding experience. Contact Deppman Law PLC For more information about Vermont real estate transactions or to ensure your closing proceeds smoothly, contact Deppman Law PLC. Our team is available to guide you through each step of the process and protect your interests from contract to closing.