Partner Compensation in a Start-Up Business

[willystyle]

Hi all,

I am planning to start a holding company through a partnership with a friend, the issue is, he doesn't have the financial capital to invest in our company initially, but he has the technical knowledge and expertise that I am looking for as a business partner.

How can I go about compensating him?

Initially, our company generates revenue by collecting rent from our tenants.

His job will be primarily market research, data analysis, cross referencing, meeting with clients, etc.

TIA!

[Gt-R R34]

50/50?

If you're going into a business where 1 side provides the dollars and 1 side provides the brain. Then it's difference of what type of capital that each individual is providing. While most people have an idea, most don't have the capital.

If you're looking for him as a business partner, i'm sure you can decide on some sort of shares program and/or if you're in a partnership, you guys could come into an agreement on how much each person owns in the company.

However, from what I am reading above, you're looking to "compensate" him, wouldn't that be considering hiring him? Hence a salary?

[4444]

Originally Posted by willystyle

Hi all,

I am planning to start a holding company through a partnership with a friend, the issue is, he doesn't have the financial capital to invest in our company initially, but he has the technical knowledge and expertise that I am looking for as a business partner.

How can I go about compensating him?

Initially, our company generates revenue by collecting rent from our tenants.

His job will be primarily market research, data analysis, cross referencing, meeting with clients, etc.

TIA!

why through a partnership & holding company? why not just both subsribe to the holding company 50/50

both put in $100 for 100 shares each (50/50) you could contribute money into teh company through a shareholder loan, he could take a salary for his skills/abilities, and then put some of that salary into the company to even things out (or to have hte company pay back your initial cash investment)

i'm just not sure what the advantage of having a holdco owned by a partnership, seeing how the partnership is a full flowthrough for cdn tax purposes

sounds like maybe your friend may need a bit more of a savvy business partner - if so, send him my way, i'm a CA with experience in business & international tax planning

[tacobell]

Originally Posted by 4444

why through a partnership & holding company? why not just both subsribe to the holding company 50/50

both put in $100 for 100 shares each (50/50) you could contribute money into teh company through a shareholder loan, he could take a salary for his skills/abilities, and then put some of that salary into the company to even things out (or to have hte company pay back your initial cash investment)

i'm just not sure what the advantage of having a holdco owned by a partnership, seeing how the partnership is a full flowthrough for cdn tax purposes

sounds like maybe your friend may need a bit more of a savvy business partner - if so, send him my way, i'm a CA with experience in business & international tax planning

I couldn't have said it any better. Listen to this man

Maybe when you say holding company, your thinking of something else, care to elaborate?