business advice anyone?
Discussion
Dear all, Hope you don't mind me picking your brains here!
my partner has always wanted to work for herself (services sector) one of her clients has set up a company (same as what she already does) in his wife's name & my partner as 50-50 business owners. The idea is my partner will run the business and they will split the profit 50-50 (therefore her client will cover all costs of the start up and claim back once making a profit).
Now she has a share certificate and documents from accountants confirming her & the investors wife as directors etc.. However when I asked regarding a contract he told me this wasn't needed because the company is in his wife/my partners name.....
is this the case or does she need some sort of contract in place???
my partner has always wanted to work for herself (services sector) one of her clients has set up a company (same as what she already does) in his wife's name & my partner as 50-50 business owners. The idea is my partner will run the business and they will split the profit 50-50 (therefore her client will cover all costs of the start up and claim back once making a profit).
Now she has a share certificate and documents from accountants confirming her & the investors wife as directors etc.. However when I asked regarding a contract he told me this wasn't needed because the company is in his wife/my partners name.....
is this the case or does she need some sort of contract in place???
GET A CONTRACT!!!!
Having a share certificate only proves she has a share in the company, as will her (business) partner's certificate.
There is thus no legal obligation for anybody to actually do any work! So, if the other person gets bored or is no good, then your partner will be lumbered.
It doesn't matter how well you know someone or how well you get on with them, when you're setting up in business, you have to treate everyone like they are bad-eggs!
I'd also question the wiseness of a straight 50-50 split but without knowing the details, its difficlut to comment.
>> Edited by steviebee on Monday 17th January 19:58
Having a share certificate only proves she has a share in the company, as will her (business) partner's certificate.
There is thus no legal obligation for anybody to actually do any work! So, if the other person gets bored or is no good, then your partner will be lumbered.
It doesn't matter how well you know someone or how well you get on with them, when you're setting up in business, you have to treate everyone like they are bad-eggs!
I'd also question the wiseness of a straight 50-50 split but without knowing the details, its difficlut to comment.
>> Edited by steviebee on Monday 17th January 19:58
Thanks for the replies.
Steveibee - regarding my g/f's business partner (well his wife) I think this will just be a little plaything for her, therefore my g/f is fine with the idea of doing all the work herself for 50% of the profits (they needed £50k in bank for insurance and costs have been about £15k to start up so could not have done this on her own)
therefore does she still need a share's contract (?) to define what will happen regarding dividens/profits etc...?
Steveibee - regarding my g/f's business partner (well his wife) I think this will just be a little plaything for her, therefore my g/f is fine with the idea of doing all the work herself for 50% of the profits (they needed £50k in bank for insurance and costs have been about £15k to start up so could not have done this on her own)
therefore does she still need a share's contract (?) to define what will happen regarding dividens/profits etc...?
From my experience the only type of partnership that stands a fair chance of succeeding is one where you both stand to gain/lose exactly the same. Where you both invest/take out the same and have similar perks. A partnership that starts off one sided in any given area is fine until the niggles start - and they will at some point.
At that point there will always be a winner and a loser and as soon as that starts it is the beginning of the end. Any hour spent discussing things before you commit to a partnership is a month of arguments saved after you get going.
From your description of the set up it sounds like your partner has gone to work for one of her clients and her client easily has the better end of the deal.
At that point there will always be a winner and a loser and as soon as that starts it is the beginning of the end. Any hour spent discussing things before you commit to a partnership is a month of arguments saved after you get going.
From your description of the set up it sounds like your partner has gone to work for one of her clients and her client easily has the better end of the deal.
Hi Ribol
I know your right, it's just difficult because my g/f doesnt want her partner to think she doesnt trust him (which all this is really based on). However, I realise we should cover ourselves.
I dont think he's really got the better end of the deal. He wanted a toy for his wife & another money earner and trusts my g/f to make a success of this. my g/f didnt have the £15k start up costs or premises etc.. or the £50k bonding, so he has really been the main factor in her being able to do something like this
maybe niavely, we dont want to bite the hand that has fed us.
The company is trading now, do u think it best to see how it goes for first 3 months, then try & get them both to sort out some kind of share agreement contract??
thanks again all.
I know your right, it's just difficult because my g/f doesnt want her partner to think she doesnt trust him (which all this is really based on). However, I realise we should cover ourselves.
I dont think he's really got the better end of the deal. He wanted a toy for his wife & another money earner and trusts my g/f to make a success of this. my g/f didnt have the £15k start up costs or premises etc.. or the £50k bonding, so he has really been the main factor in her being able to do something like this
maybe niavely, we dont want to bite the hand that has fed us.
The company is trading now, do u think it best to see how it goes for first 3 months, then try & get them both to sort out some kind of share agreement contract??
thanks again all.
soir said:
my g/f doesnt want her partner to think she doesnt trust him (which all this is really based on). However, I realise we should cover ourselves.
This is only my opinion but it seems that you already have your doubts about which way this is going. There should be something in place for you not to have to worry about this.
soir said:
I dont think he's really got the better end of the deal. He wanted a toy for his wife & another money earner and trusts my g/f to make a success of this. my g/f didnt have the £15k start up costs or premises etc.. or the £50k bonding, so he has really been the main factor in her being able to do something like this.
The trouble with this is that your g/f will be grafting to run a business for people who are not relying on it’s success. If they get bored with it they could just shut it down, it will make little difference to them but may ruin your g/f.
soir said:
maybe niavely, we dont want to bite the hand that has fed us.
Business is business, the only person that will look after your g/f in this partnership is her.
soir said:
The company is trading now, do u think it best to see how it goes for first 3 months, then try & get them both to sort out some kind of share agreement contract??
Not sure what she does etc but follow me for a sec. As an example, say g/f has to employ someone to do half the work with her, who pays for that person’s wages? These are the sort of things that start niggles and should of already been discussed, if they haven’t been.
I had a partner for 15 years, we recently sold up, we are still mates just like we were 20 years ago. I put this down to having sorting things out properly before we kicked off.
Thanks again for all your input.
Tonker, they have put in £50k to a fixed account (for the first year i think) so yes, she could sign £25k to herself and do a runner!
She/we are happy for the investor to share in any profits (however good) 50/50. as i said before, there is no way in the world she would have done this without him so even it it makes tons of money in years to come we wouldnt begrudge him his 50% (maybe that view could change!! only kidding).
I have made my g/f aware of all this, but she would rather walk away from it alltogether than upset this chap (i know it is silly, but this chap has done everything for her) we are happy to work on the basis we have verbally agreed, but i realise we should have this in writing really.
I'll leave it 2-3 months to see how it goes, then push her to get something..
Tonker, they have put in £50k to a fixed account (for the first year i think) so yes, she could sign £25k to herself and do a runner!
She/we are happy for the investor to share in any profits (however good) 50/50. as i said before, there is no way in the world she would have done this without him so even it it makes tons of money in years to come we wouldnt begrudge him his 50% (maybe that view could change!! only kidding).
I have made my g/f aware of all this, but she would rather walk away from it alltogether than upset this chap (i know it is silly, but this chap has done everything for her) we are happy to work on the basis we have verbally agreed, but i realise we should have this in writing really.
I'll leave it 2-3 months to see how it goes, then push her to get something..
Gassing Station | Business | Top of Page | What's New | My Stuff