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SeekingInformat
December 16, 2017

Structuring a business

  • December 16, 2017
  • 1 reply
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So, I am trying to structure a business with two partners.  I’m not 100% of ownership or remuneration would love advice.  So, partner A has a contact which can lead to a very lucrative contract.  Partner B partner has the time and expertise to implement the contract that would be created.  Partner B would be doing 90% of the work with 100% of the expertise.  Partner A will be doing basic clerical tasks but brought contract to table.  Any suggestions on ownership percentages and remuneration for the partners as far as salary.  It will be an S-Corp for Dividend sake.

      1 reply

      ShanaNiederman
      ShanaNiederman
      December 16, 2017

      Welcome to the QB Community, @SeekingInformat. It's really nice to *see* you here! Thanks for jumping in and asking a great question. I wonder if @201192 or @201097 could share suggestions?

       

       

      A
      Anonymous
      December 16, 2017

      Hi.

       

      First let me say up front that I am *not* an accountant.

      But I work with them a lot, and have seen my share of structures both good and bad.

       

      I can't answer your question, per se.  However, I can offer some additional things to bring to the table when you seek advice from a CPA, EA, or business legal advisor you trust.

       

      1.  Not all compensation necessarily needs to happen through the % of ownership OR through the employee status or salary compensation.

      2.  With some structures, I believe it is possible to build in changing payments or other forms of compensation into the package. 

       

      Your ability to do more or less of the above *might* depend on the business entity structure you choose. 

       

      In other words, I think the best place to start is to think of two things:

      1.  What do you feel would be a fair division of funds based upon the only contract you have *at the moment*.

      2.  What do you feel would be a fair division for all instances going forward, that do not yet have anything known about them.

      IOW, you may feel the bringer of the contract deserves to be richly compensated here, but not necessarily on contract he doesn't have such a large hand in going forward?

       

      Anyway, if you decide what is appropriate compensation-wise, both initially and more formally/permanently, then a good CPA etc should be able to direct you to the corporate form type that can accomplish that.  Further, they should be able to describe and set up *how* you do that (equity, salary, guaranteed payments, combination?) within the structure as well.  And a good business attorney should be able to memorialize the logic behind those choices so appropriate changes can be made in the future if need be.

       

      Good Luck

      and Congrats on the new venture!

      *kristen

       

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