How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Zachary Your Own Question

Zachary
Zachary, Attorney
Category: Business Law
Satisfied Customers: 3818
Experience:  Internationational Commercial Attorney
Type Your Business Law Question Here...
Zachary is online now
A new question is answered every 9 seconds

Hi, Im starting a new business with a partner and would like

Resolved Question:

Hi, I'm starting a new business with a partner and would like to get a professional opinion on the share of the company to offer her so I'm confident I made a fair decision. The idea of the company and the product I developed are mine. I planned to start a business on my own in the next year or so. However, when I first met this person she got very interested in this business and offered to go in it together. There is no question about the investment because the funds needed are low and I could easily cover them myself. What she's really bringing into my business is some knowledge about the industry and a personal experience in it. She also appears to be a great sale's person which skills I lack. And, because of this I plan to have her lead Sales and Marketing although I don't know yet the extent of her skills. In addition, she can build a website because she has experience doing so while it'll take me much longer to accomplish if I were to do it myself. So, I'm planning to offer her a third of the company (i.e. 33%). She initially wanted 50/50 but prefers 40%. What is your opinion/experience?
Submitted: 1 year ago.
Category: Business Law
Expert:  Zachary replied 1 year ago.
Hi,

Thanks for your question.

Do you plan on also paying her a salary for her work?

If you were to hire a person to do the work that she could do, what do you think you would have to pay the person?

How much revenue do you project to make in the 1st and 5th year of your business?
Customer: replied 1 year ago.

I don't plan to pay her salary. We would divide the profit based on the share of the company and she can decide how much of it is salary vs. distribution.
If I was to hire a sale's person for instance, I would have paid commissions only, no base salary and perhaps some bonus program as a % of profit


 


I haven't yet completed my financial projections analysis but as a rough estimate, revenue of $150,000 (to be very conservative).


 

Expert:  Zachary replied 1 year ago.
The fact is that the business idea is yours and yours alone. You are the one starting the business and can do it without her. The true consideration for bringing her on is mostly for labor purposes and for a little bit of experience and skill. However, it is also true that you could simply hire someone based on a commission scale without needing to provide a cut of the overall profits.

As this is the case, a percentage share of 25%-40% would be reasonable. I think you need to be realistic in making sure that she is given enough of a share of profit to form a living wage. I would consider giving her a lower percentage share of the profits along with a small commission. This way, you can make sure that she is incentivized properly.

You should also make sure that you have an operating agreement that she signs with you which gives you the right to buy out her shares at the end of the year (so you can kick her out if you do not like working with her), and perhaps gives her the option to potentially purchase more shares from you if you if she reaches certain milestones. Further, you need to strictly lay out her work requirements in the agreement and tie this to your ability to exercise the option to buy her shares out if she is not performing up to standards.
Customer: replied 1 year ago.

Thank you, XXXXX XXXXX a very helpful advice. I plan to draft an operating agreement but would like a professional opinion in case anything is missed or worded inappropriately. Do you provide services with this, i.e. review the document and provide feedback/language changes?

Expert:  Zachary replied 1 year ago.
I'm glad to be of service.

I'd be happy to review your document and provide you with feedback. However, you will need to address this to me in a separate question.

To do this, simply click on my profile and submit the question to me through that portal. Start the question with "For ZDNLaw only."

In regards XXXXX XXXXX question, please signify your acceptance of my answer by rating it positively so that I am compensated by the website for my work with you today.

Thanks,
ZDN
Zachary, Attorney
Category: Business Law
Satisfied Customers: 3818
Experience: Internationational Commercial Attorney
Zachary and 10 other Business Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA
 
 
 

Related Business Law Questions