Hi All,
I'm going into business with someone and need guidance. I will gladly provide more info if needed. See below.
Business: LLC, taxed as an S-Corp, 2 partners, will need approx 50k to 100k for startup
Scenario:
Partner A will fund 50k and does not plan on joining the business for more than 5% of the time until 6 to 18 months later, once the business is established and getting revenue. Partner A will not draw a salary until she is full time with the business.
Partner B will fund 50k and join the business immediately (full time), while drawing a salary from the business account.
Questions:
Should there be a bonus/additional percentage for Partner B once the company is profitable? Partner B is basically doing all the heavy lifting initially, takes a greater risk by quitting her long term job, and brings 10 years experience in order to get this up and going. If so, what is fair or the normal standard and for how long?
Is there any benefit to Partner B if the percentage of ownership starts off at...let's say, 65/35 (B/A) until Partner A joins the company full time? And then at that time, the percentage changes to 50/50? I see, in theory, why that would give incentive to Partner A to hurry up and join--but wouldn't that only work once we're profitable? If Partner A ends up coming on at 9 months in, and we're not profitable yet--then what would be the benefit to a split in Partner B's favor?
I'm going into business with someone and need guidance. I will gladly provide more info if needed. See below.
Business: LLC, taxed as an S-Corp, 2 partners, will need approx 50k to 100k for startup
Scenario:
Partner A will fund 50k and does not plan on joining the business for more than 5% of the time until 6 to 18 months later, once the business is established and getting revenue. Partner A will not draw a salary until she is full time with the business.
Partner B will fund 50k and join the business immediately (full time), while drawing a salary from the business account.
Questions:
Should there be a bonus/additional percentage for Partner B once the company is profitable? Partner B is basically doing all the heavy lifting initially, takes a greater risk by quitting her long term job, and brings 10 years experience in order to get this up and going. If so, what is fair or the normal standard and for how long?
Is there any benefit to Partner B if the percentage of ownership starts off at...let's say, 65/35 (B/A) until Partner A joins the company full time? And then at that time, the percentage changes to 50/50? I see, in theory, why that would give incentive to Partner A to hurry up and join--but wouldn't that only work once we're profitable? If Partner A ends up coming on at 9 months in, and we're not profitable yet--then what would be the benefit to a split in Partner B's favor?
via Small-Business-Forum.net http://www.small-business-forum.net/starting-your-business/9678-first-timer-here-need-help-partnership-agreement.html
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