Do you "Have" to set up a new entity...No. Should you?...It depends. A structures professional, tax expert, or a business lawyer can give you the best advise on that. It would depend on the amount of liability you are opening up to each business activity.

This is a prime example of why "stock template" operating agreements are not always the best. They don't always cover every situation and can sometimes lead to confusion. It is best to have specific language on the Operating Agreement that discusses exits, sales, and division of assets. With no other information to go on Scenario one is probably the way a business adviser would interpret the situation. The best action is to consult an contracts lawyer.

Having helped a few start-ups in different industries I can tell you that before you launch you need to have planed out everything that you can. Naturally you will not be able to plan for everything but you want to think through as much as possible. Having a business professional help you map out a business plan is the best way to start. This will give you a point from which to deviate for the first few years of operation and also show investors and lenders that you have a plan in place. Feel free to reach out to me and we can get your business plan started as well as take care of any other start-up needs you have.

Good Question! I have seen this situation on more than one occasion. The thing to understand here is that there is more than one type of equity and you two need to come to an agreement as to how these types of equity will be valued in your partnership. The first type is what you are bringing to the table CASH. This one is simple and easy to understand. Cash will be the fuel and life blood of the business. Without it there is no business. Your partner is bringing two kinds of equity; SWEAT equity and CUSTOMER equity. Remember that know-how and a client base are very valuable, and the business cannot grow (i.e. make more CASH) if you don't have know-how and customers. When partners do not come to an agreement up front as to how much they value each others contributions, disaster is always on the horizon. The best way to do this is to set up an legal operating agreement (formalizing the arrangement) and a business plan (which sets the both of you on the same page). I could start this process for you easily on a call. Best of luck.

It really depends. I have worked with multi million dollar deals in the past. A $1M investment is a good find for a start-up however you will want to make sure you fully understand the terms. You will also want to fully understand if this is to be a 100% debt instrument, equity, partial equity, or a convertible note. Overseas investors are not necessarily bad, but you should be on guard if they ask you to pay funds upfront without any escrow protections. I'd be happy to discuss your situation in more detail on a consult.