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xamxmith
01-19-2006, 08:43 AM
I'm buying-in to a small one-man online business with my contribution being 200 hours of web application development.

The current proprietor estimates he has put in 4000 hours at tasks that would have had an average wage of $50/hr or $200,000. My 200 hours are valued at $100/hr, or $20,000 so we figure I get 10% of future pre-tax profits.

The business is operating at break-even now.

In the future there will be more hours put in by the 90% partner while operating the company at a loss or break-even and therefore no cash to pay him wages.

I’m thinking maybe using stocks but I’m clueless. We could ‘print’ 1000 shares, he gets 90 I get 10 and keep 900 in a ‘pool’ to pay him with for his labor until the company is profitable and can pay dividends.

We don't want to bother with incorporating or lawyers if it can be helped.


A lawyer once said to me, "The only ship that isn't going anywhere is a partnership."

BusinessMan
01-19-2006, 03:39 PM
"We don't want to bother with incorporating or lawyers if it can be helped."

Any business partnership that isn't based upon a formal written binding agreement is asking for problems. It may seem a pain now, and you may not wish 'to bother', but you may well regret this later. It is actually a very common scenario.

Whether you use a lawyer or some other method, I would suggest that you do need that contract.

Maverick
02-01-2006, 04:00 AM
I suggest you visit the NOLO Press website. They have books on incorporating, LLCs, and partnerships written by Anthony Mancuso, the best corporate attorney.

Partnerships don't issue stock. And what type of partnership are you considering? A general partnership or limited partnership. Both have state mandated laws which vary depending on where you live.

From your statement, I'm sure you are referencing a General Partnership. Personally, I wouldn't touch the partnership legal structure with a 100' pole! Believe me; you NEED some counseling, at least from the right book.

Limited partnerships can issue "Units or Shares (depending on your states code). I would consider doing an LLC. You can by a step-by-step book from Nolo Press that will walk you step-by-step through the process.

I suggest you consider not "guessing" at what you want to do and get the facts. Also, you face MAJOR tax consequences depending on your final business structure election, relative to your annual income. That is a MAJOR concern in your situation.

I agree with you, attorney fees can be quite ridiculous. But it's EASY to form a corporation or LLC online. BUT you do NEED a good book to help you make setup decisions. Believe it or not, it isn't rocket science. Setting up an LLC or C corporation is VERY SIMPLE once you understand the basics.

Just some food for thought. I hope this helped some.

Regards,
Maverick

sbatz72
02-09-2014, 01:36 PM
I think your idea with the stock shares sound good. I know if I were in you current situation, I most certainly would want to have some sort of legal, and official way of proving I did my work. This is especially true if you are working with someone you know only from online. I am not a very trusting person these days. I am one who would need to incorporate and involve attorneys before I did something like this. I think I would need the attorney to hold on to each partners "stock" certificates.

delusional
02-10-2014, 03:51 AM
I think your idea with the stock shares sound good. I know if I were in you current situation, I most certainly would want to have some sort of legal, and official way of proving I did my work. This is especially true if you are working with someone you know only from online. I am not a very trusting person these days. I am one who would need to incorporate and involve attorneys before I did something like this. I think I would need the attorney to hold on to each partners "stock" certificates.

I agree. This could be the solution. Just make sure both parties have a binding agreement. Nothing will get you more angry if you get scammed out of your shares in the end.

emilx_06
04-02-2014, 12:13 PM
Our small business started as partnership. My wife's relative let us borrow an amount of money which we used as capital. For a while, we thought that everything was doing great. We had the first mover advantage, we didn't have competitors back then when we started. At present, our competitors became five and we all soon to realize how saturated the area is. That affected our payment to the loan we had. I say get into a partnership but make sure to map all things out starting with the share you each will have. Everything has to be accounted for. Make sure you keep records of transactions with your business partner for they will become evidences should problem arise.

Accountingpayroll
11-25-2014, 04:04 AM
In partnership
As much as partners involved they have to share everything either profit or loss
anything can be share.

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MichealCurry
06-12-2019, 07:12 AM
Gain much knowledge going through this topic.

Lilykevin86
07-04-2020, 12:32 AM
Prior to entering an organization, you ought to make composed agreements that spread your understandings. A benefit sharing understanding for the most part communicates the proportion you'll

nadiasonii
04-08-2021, 04:04 AM
Before entering an association, you should settle on made arrangements that spread your understandings. An advantage sharing comprehension generally imparts the extent you'll