Business people - need your advice

[manlymatt83]

My business partner Selena and I own 50% shares in an LLC based in New Jersey.

We are a growing business.

Recently, we decided to deviate a bit from our business plan and start doing some side projects - more create websites that can generate some side income for the company.

We would like to bring in a third person, who we both know very well, to help us with these websites. However, he isn't part owner in the company, but we want to make it worth his while.

Giving him part ownership in the company isn't an option.

So we're wondering what to do:

1) Some sort of "joint venture" between "him" as a company or an individual and our LLC.
2) Do the project as a project OF our LLC and then just write up an agreement saying that he'll get 50% profit share.
3) Some other option.

Does anyone have any ideas? We don't really want to do it as a joint venture 50/50 because then our company, of which I am 50% owner of, will only own 50%, and his company, of which he will be sole owner of, will own 50%... so therefore, technically, its a 50/25/25 split. (the 25/25 being my business partner and I).

Thanks for any ideas...

-Matt

 

[Q]

Well, since I don't own a business or anything, but I do dabble in 'partnerships' with websites, I'd got with option 2.

Since mine are casual partnerships, we don't establish a plan for payment, more or less just go with it and if anyone comes of it, we will then figure out what to do -- mostly just a 50/50 or 40/60.
Note that no project is really taking any money to start up (yet) so this is why it may not apply to you.

 

[ChaoZ]

Why don't you use hire him as a employee?

 

[Q]

Originally posted by: ChaoZ
Why don't you use hire him as a employee?

Because then you'd have to pay him even if nothing was completed or successful among other things--- too much of a risk.

 

[manlymatt83]

bump

 

[jjones]

If you create a new LLC with the two sole members being this person and your LLC, then you will each have a 50/50 split, not 50/25/25. Make your LLC the managing member if you're worried about day to day control.

 

[Gunslinger08]

Why not just make a separate LLC with all 3 of you being equal owners?

 

[dandruff]

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

yup, that way the new OA of the new LLC will govern that you can draft to suit.

 

[manlymatt83]

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

 

[Q]

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

That's going to be the easiest to do IMO.

 

[dandruff]

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

if you have everything in place then to duplicate it for next llc should not be more than 4-5 hrs of work .. unless u r one of those who pays someone to open an llc / and hires a CPA for routine stuff ...

keeping separate llc is the clean way and less hassles in the longterm imho, more so with partnerships.

 

[compman25]

How do you accomplish anything?

 

[bctbct]

Pay him as a consultant.

 

[MikeyIs4Dcats]

hire him as a subcontractor for a fixed sum or percentage of profit

 

[AlienCraft]

Originally posted by: compman25
How do you accomplish anything?

lol

ahhhhhh good times.

 

[AlienCraft]

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

If you don't have time to do it right the first time, how do you find time to do it over?

Do the separate LLC.
Do not comingle.

Comingling BAD.

Trust me on that one.

 

[manlymatt83]

Originally posted by: AlienCraft

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

If you don't have time to do it right the first time, how do you find time to do it over?

Do the separate LLC.
Do not comingle.

Comingling BAD.

Trust me on that one.

What do you mean right the first time? We did it right the first time no problem.

OK.... thanks for the advice.

 

[Q]

Maybe this will help?

 

[manlymatt83]

Originally posted by: Quintox

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

That's going to be the easiest to do IMO.

So if we wanted him to have 50% profit sharing, we just draft up a document?

 

[manlymatt83]

Originally posted by: dandruff

Originally posted by: mjuszczak

Originally posted by: joshsquall
Why not just make a separate LLC with all 3 of you being equal owners?

Honestly, just too much work. plus, we already have insurance policies/checking accounts, etc. for the current LLC. It would just be nicer to be able to do this as a project of the current LLC and just bring him in as profit sharing if we can.

if you have everything in place then to duplicate it for next llc should not be more than 4-5 hrs of work .. unless u r one of those who pays someone to open an llc / and hires a CPA for routine stuff ...

keeping separate llc is the clean way and less hassles in the longterm imho, more so with partnerships.

No, we did everything ourselves.