Forum Moderators: buckworks
How do we legally make me 50% partner in the website part of the company, but not in his installation business, yet still keep the protection of being incorporated. We'd like to do it as inexpensive as possible and not start a separate corporation.
What Id do is form an LLP or imited liability partnership. But get some good advice.
1. If the website has a different name from the previous INC then you can register a new company with the new name, or change the website name. You could always have the website with whatever name you want but use "blah.com is a division of new name inc.". when registering the new company, make sure you are BOTH shareholders.
2. He could sell you (or give you in exchange for services & time which have already been put in) shares in his company. This would however mean you'd be tied into whatever the current inc company does, including the installations.. But, it would be possible for him to sell you 50% or shares, make the website a division of the existing inc., then have you both go 50/50 on the website, but he takes anything from the installations. A bit messy, but if you're both honest it would proably work out.
In saying that... I'm certainly not a professional, and it's entirely possible that all of the above is bullsh*t.
But, this needs to also have a contract between his company and the joint company (basically, have both of you sign it) which stops his company from charging the joint company too much (or too little) otherwise the tax man might have some issues. The contract should also ensure that the joint company does NOT have to source exclusively from his company and frankly I would recommend that you have final say on that score given his interests.
So - you need a jointly owned company AND a Joint venture agreement or contract between the two.
It is you that is in danger of being stuffed here, so a good alternative is for you to have a mojority share in the joint company, with the other guy getting some of his benefits from trading through yout company rather than dividends. Assuming the domain is owned by the joint company then you have control over the marketing and choice of widgets and he has ultimate control over supply and input costs, whcih is about right balance wise.
Consult with professionals. You really need to separate the executive, board of directorys and management of the 2 in a situation like this with the concerns you are expressing. Joint ownership and joint control, mingling of assets, etc. make for a vulnerable situation.
If it's making that much money and spend some money and time to get it right.
On the other hand, insurance solves a multitude of liability concerns and, depending on the exposure, it's often the better solution than keeping 2 businesses going for the sake of limiting liability.
It's a long story but look at both options AND, in either case, you will likely need insurance.
I tell many people that their answer isn't incorporation - it's suitable insurance. The cost of adequate insurance is often far less than the cost of setting up corporations, complying with corporate laws, etc. Worse than that, many 1 person shows don't really benefit since the person gets sued anyway.
When I sue the business company I also sue the bus driver....Think about it in your case. If you are "doing it all" the mere incorporation doesn't mean a lawyer won't sue the "hands on" person.
None of this is legal opinion directly related to your situation.
Webwork, Esq. and webmaster wannabe
