BRHMFG
Aluminum
- Joined
- Oct 9, 2014
- Location
- South Dakota
Setting: Partner A and B went together on purchasing an existing manufacturing business building steel products. Partner A had some cash and experience in the exact product but no shop, Partner B had shop and some equipment but no cash. Purchase was made which included fair line of metalworking and fabrication equipment. Partner B had numerous enterprises none of which made a complete living, hence the motivation to pursue joint effort with A. One of the enterprises being metal fab.
After forming LLC and actually getting this thing rolling one of Partner B's customer wants another of Partner B's products. It has been agreed on that Partner B may service his own enterprises separately and on his own time. However, this project will be done by both of us in the shop and work on LLC's product will stop while this one get's built.
Question: Should Partner B run this separately, buy his own materials and simply pay the LLC for shop time? (His benefit, he keeps any profit)
Or: Should it be done by the LLC. LLC purchase materials and keep profits. This benefit me essentially as Partner A. However, seems simpler for the books and billing.
Leaning toward second option, which brings the question: Since he designed the product, has blueprints already, etc, what is that worth? Is there a common percentage of royalty that should get paid?
After forming LLC and actually getting this thing rolling one of Partner B's customer wants another of Partner B's products. It has been agreed on that Partner B may service his own enterprises separately and on his own time. However, this project will be done by both of us in the shop and work on LLC's product will stop while this one get's built.
Question: Should Partner B run this separately, buy his own materials and simply pay the LLC for shop time? (His benefit, he keeps any profit)
Or: Should it be done by the LLC. LLC purchase materials and keep profits. This benefit me essentially as Partner A. However, seems simpler for the books and billing.
Leaning toward second option, which brings the question: Since he designed the product, has blueprints already, etc, what is that worth? Is there a common percentage of royalty that should get paid?