Investing in a small business?

Question

My brother is starting a small business and I would like to invest - partly to help fund the venture, partly to (hopefully) reap some rewards if it goes well.

How should I go about making the investment? I'm not worried that he would elope with the money, but I do want some sort of agreement that, should the business start to make money, then I get X amount in return. Can you show me any example contracts (good websites?)?

Are there any tax benefits/implications? This will be under UK law.

Thanks

Answer 1

I am not sure about UK rules but in in the USA you could form a LLC and become a % owner of the business. When profits come then you would be eligible for your % of the money. Also if there was a problem with the company, IE fraud, then you are protected form liability that the company imposes on the public. The LLC is easy to set up in the states and easy to maintain.

Ask for help from your local SBAM and make sure that there is business plan done. If it is not written down the business will not succeed.