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Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 23789
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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Last year, myself and two friends formed an LLC and started

Customer Question

Last year, myself and two friends formed an LLC and started a food packaging business. We each invested $20k and decided on a 33.33% split equally. From the beginning, I agreed to work the business full time (while receiving $2k/mos salary) and the other two guys had their own full time jobs. The agreement was that they would join on when the business can support a salary for them too. Today, I am still the only one working the business. One of the partners owns his own restaurant and they are our biggest customer. So asking him to join me full time is sort of shooting ourselves in the foot. Yet I believe I've done enough by myself and its time for someone to help me out. Nevertheless, the reality is that it is unlikely that one of them will drop everything and join the business because they can't work with no salary either. Question: What would you tell the other guys if you knew they likely wouldn't join in the near future? What solution(s) would you offer if you were me?
Submitted: 4 years ago.
Category: Business Law
Expert:  Law Pro replied 4 years ago.
Are they receiving any monies back on their investment?
Customer: replied 4 years ago.
If you are referring to dividends, no they are not receiving any monies back. I am the only person receiving money and that's a salary of $2k pretax per month.
Expert:  Law Pro replied 4 years ago.

Then they aren't even receiving interest on their monies invested.

 

Too, since your only receiving $2k per month you can't possibly buy them out of the business and live at the same time.

 

Given just those circumstances - I think you have to come up with a new agreement with them as to ownership interests in the business and the amount of time each has to work there. Given that your only making $2k per month, I would think that you might want to move on yourself and look for other employment.

 

Can you sell the equipment/inventory and recover you expenses?

 

 

Customer: replied 4 years ago.
I dont want to buy them out nor do I want to quit the business. The business is going pretty steady and there is lots of potential in 2010.

I was thinking of a commission plan where I receive a percentage of every account I bring in.

Also as far as ownership percentage goes, I was thinking of re-structuring the ownership where each partner owned shares. Maybe we can all start with the same number of shares and as time goes by or if we reach some performance hurdles, the person(s) working the business gets equity grants in shares? Something like that? Do you have any examples or structures that could work in our situation?
Expert:  Law Pro replied 4 years ago.

That could be done - that because your the only one working you would make a larger percentage or the first amount of monies when so much was paid.

 

No, I don't have any examples of something in your situation. Yours is quite unique in that 3 persons put in money and only one is working - and they aren't getting anything at this time for their monies.

 

It's usually how creative can you be and what can you all agree on. Yes, your the only one working but they have monies invested and getting no return on their investment.

Customer: replied 4 years ago.
Thank you for your time and effort. However I'm afraid I did not receive the advice or solutions that I was looking for. I would kindly ask that I could decline your answer.

thank you.
Customer: replied 4 years ago.
I would like to opt out at this time and request a new expert please.

thank you.

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