I'm not a huge fun of going thru the time and expense of legal formation every time you want to explore a potentially lucrative side project... I once rapidly

I'm not a huge fun of going thru the time and expense of legal formation every time you want to explore a potentially lucrative side project... I once rapidly formed an LLC because someone wanted to buy a side project of mine. But you can protect yourself. First, only dabble with people who you trust. It's not perfect (every couple believes "till death do us part" when they say it), but it helps. Beyond that, it's trivial to write out a shared understanding that will get you much of the way to "protected". Note that the most important thing is that they are ethical and there is a shared understanding. Legal docs aren't a substitute for that, they're just a weapon if you need to go to war. Discuss the following: 1) Compensation. Equity? Deferred $? If equity, % of ownership (fully vested) and rate of vesting. (read: http://thenextweb.com/entrepreneur/2013/07/21/startup-founders-heres-why-vesting-is-your-best-friend/ http://thenextweb.com/entrepreneur/2013/07/21/startup-founde...) 2) What happens in various dissolution scenarios? What if either or both of you want to quit? What if either or both of you wants to fire the other? Who owns the code? Once you share a verbal understanding, write it down via email to him and have him respond to the email confirming that he agrees. If you're worried, print and sign 2 copies. It doesn't have to be legalese to give you teeth if a fight happens... But your goal should obviously be to avoid a fight. You have a lot of power right now, but you should use it lightly. Say, "Hey, X-- I'm feeling increasingly uncomfortable and would love to take some time out to discuss our partnership. I know incorporation is expensive and time consuming, but I'd like to make sure we share an understanding on X, Y, and Z. Once we do, I'd like to write that down, email it, sign it, etc. Does that make sense? When would be a good time for that? I suspect we'll need a few hours of quiet time." Until that happens, stop writing code and (if you think he might be a bastard) make sure you have the passwords.