How to compensate partner for product he brings to the business? - Page 2
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  1. #21
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    Quote Originally Posted by Mcgyver View Post
    I don't get this "on your own time" thing - is he not working in the business? When you have a business, all your time and attention is on the business. For example, any executive employment contract will have language about that job being the only thing that person does. Its not suppose to be part time for buck-stops-here guy..

    I suppose the point is if you are both working in the business, and one is already defining as 'their own time", that might be trouble. You're going to be there all night making sure a deadline is met, but he gets to call it "his time" after say 5 O'clock and work on another business?

    I've had two great business partnerships and two litigious nightmares . There's the obvious cliches (which are true): good communication, good fences make good neighbors etc. However really where the wheels fall of the cart on partnerships is your interests, on pretty much anything, are no longer parallel. Once they are diverging, even on a small thing, its where the trouble starts; conflicted interests. Aside from having a really good person (ethical and a person of integrity) as your partner, you both need to constantly make sure those interests are parallel. Probably true of all of life's partnerships
    That's what I was thinking: there is no such thing as 'his own time' without it affecting his performance on company time and projects. The expenditure of mental energy on anything, is going to sap the mind, and make that energy less available for everything else. If 'his own time' project is totally farmed out to a third party for minute by minute management, then that is different, the partner could be still active in company business. If it is still a distraction for him, then he needs to cut you in.

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  3. #22
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    Since you already have a partnership and he has another enterprise already this is simple and fair to do. Your LLC qoutes his enterprise for the work required in a detailed written proposal covering the work and the payment terms exactly as for any other customer. This establishes you are being fair. His enterprise gives your LLC a SIGNED purchase order for the work. This establishes the financial relationship between the two entities. When the work is complete your LLC sends his enterprise an invoice. If your LLC does the work for less than your estimated cost you both win. If you go in the hole on it you both lose. What he makes on the work in his other business is none of your concern. Last but not least if he gets run over by the Greyhound bus you still get to make claim against the assets of his other enterprise. Neat, clean, no misunderstandings that lead to a messy court appearance. Its just good business.

  4. #23
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    Quote Originally Posted by garyhlucas View Post
    If your LLC does the work for less than your estimated cost you both win. If you go in the hole on it you both lose.
    No, if the LLC goes in the hole on it, YOU lose, and HE wins TWICE...

    What he makes on the work in his other business is none of your concern.
    It really is a concern, any money the LLC doesn't make on the parts (money split), becomes
    all of HIS money.. Any LOSS the LLC takes on the deal instantly becomes profit on HIS end,
    and a loss in YOUR pocket.

    Quite honestly I would gladly take a $5 loss on my left hand to make a $10 gain on my right hand..


    Its a situation that could become very ugly very fast...



    To the OP.. What is your partner proposing???

  5. #24
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    OP here again finally, Hey worked out great so far! Product was run thru LLC: Material purchased, customer invoices etc. Seems much better approach to both of us. LLC is reimbursing partner for some steel he had on hand. In fact, it looks like one of our customers found out about partners product and may very well be buying some of both!


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