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Thread: A percentage split of company between two people

  1. #11
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    Quote Originally Posted by gadfly56 View Post
    It sounds like Party A is trying to hide assets/income from discovery, which is potentially a criminal offense if this is a violation of a court order. Party B would be an idiot to go anywhere near this arrangement 'cause now he is potentially a co-conspirator.
    this is the dumbest idea I have ever heard. party A should just work as an employee for party B.
    Bob

  2. #12
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    All that, and doing a 50/50 split without any kind of tie-breaker pre-agreement is a recipe for disaster. If you want to split things evenly, do the ownership as 49.9%/50.1% so that one person is the majority owner and they can call the shots if there's a dispute.

    Someone pointed out that the lawyers always make money on these things- either a little at the outset to write the agreements or a lot later to settle the disputes. I prefer to pay just a little up front.

  3. #13
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    Quote Originally Posted by gadfly56 View Post
    It sounds like Party A is trying to hide assets/income from discovery, which is potentially a criminal offense if this is a violation of a court order. Party B would be an idiot to go anywhere near this arrangement 'cause now he is potentially a co-conspirator.
    Well that is irrelevant. And this is why they still have stuff called "cash". And besides, not that I agree with it or condone what I'm about to say next, but isn't this no different than paying an illegal alien to work for you, a major problem in this country we are battling at this very moment? I am sure somewhere a long the line you have done this. Just to be clear, party A) has no legal rights to company.

    Can we continue please?
    Last edited by JohnDS; 09-28-17 at 02:15 PM.

  4. #14
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    Although no shareholder is required to loan money to the company, yes it is only fair that the 30% shareholder only loan 30% of the monies needed.

    However, I hope you only have to do this once. After the first job is done and the payment is collected, and all the loans are paid off, don't distribute all of the profit. Keep some around for working capital.

    Note that you'll have to both be paid as w2 employees if you're an officer of the company and or doing more than a minor amount of work for the company. You'll need to pay your friend a reasonable salary for the work he's performing for the company.

    The best way for your friend to shelter this money would be for the company to only pay his salary and not pay him any dividends until a reasonable amount of time after the divorce. He could even borrow the money from the company, with interest, if he needed access to the money sooner. However, the corporation will pay taxes on the retained profit, and then your friend will also pay taxes when he is eventually paid the dividends. In essence, being double taxed, although there will be no employment taxes on this income. Additionally, if the company retains $100,000 in profit instead of distributing it, your friend now has $70,000 equity in a company, which the divorce court may not like.

    Since you are doing very little work for the company, you don't need to take a very high salary. So most of your money can be paid in dividends exempt from employment taxes. Additionally, your employer is possibly maxing out your FICA contributions, meaning lower employment taxes even on the salary you do take from the company. You will get the greatest tax shelter benefits, not your friend.

  5. #15
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    Quote Originally Posted by Mark A. View Post
    Although no shareholder is required to loan money to the company, yes it is only fair that the 30% shareholder only loan 30% of the monies needed.

    However, I hope you only have to do this once. After the first job is done and the payment is collected, and all the loans are paid off, don't distribute all of the profit. Keep some around for working capital.

    Note that you'll have to both be paid as w2 employees if you're an officer of the company and or doing more than a minor amount of work for the company. You'll need to pay your friend a reasonable salary for the work he's performing for the company.

    The best way for your friend to shelter this money would be for the company to only pay his salary and not pay him any dividends until a reasonable amount of time after the divorce. He could even borrow the money from the company, with interest, if he needed access to the money sooner. However, the corporation will pay taxes on the retained profit, and then your friend will also pay taxes when he is eventually paid the dividends. In essence, being double taxed, although there will be no employment taxes on this income. Additionally, if the company retains $100,000 in profit instead of distributing it, your friend now has $70,000 equity in a company, which the divorce court may not like.

    Since you are doing very little work for the company, you don't need to take a very high salary. So most of your money can be paid in dividends exempt from employment taxes. Additionally, your employer is possibly maxing out your FICA contributions, meaning lower employment taxes even on the salary you do take from the company. You will get the greatest tax shelter benefits, not your friend.
    Thank you very much for your time in answering that. And to all as well.

  6. #16
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    Quote Originally Posted by gadfly56 View Post
    It sounds like Party A is trying to hide assets/income from discovery, which is potentially a criminal offense if this is a violation of a court order. Party B would be an idiot to go anywhere near this arrangement 'cause now he is potentially a co-conspirator.
    no, they are trying to figure out how to steal more chain than
    they can swim with. should person A have 70% more than they
    can swim with, or 30% more?

    as for completely trustworthy, my experience is, that something
    a person will do to someone, they will do to anyone, if there is
    an incentive in it for them.

    you'll want to watch carefully how hiding assets is done in this
    instance, so you'll recognize it when it's done to you.

    70% of what? no, there is no profit left on the job. let me show you....
    ~New signature under construction.~
    ~~~~Please excuse the mess.~~~~

  7. #17
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    Quote Originally Posted by Fulthrotl View Post
    70% of what? no, there is no profit left on the job. let me show you....
    The movie industry is famous for that....

  8. #18
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    Quote Originally Posted by Mark A. View Post
    In essence, being double taxed, although there will be no employment taxes on this income.
    Please ignore this part of my ramble. Although dividends are double taxed, an individual will usually pay less taxes taking dividends over salary.

  9. #19
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    What you are splitting is profit. Profit is arrived at by taking all income and subtracting all expenses. What's left over is split. Before that point it's neither of yours and it's just confusing to think of who's is what before that point.

  10. #20
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    Quote Originally Posted by petersonra View Post
    this is the dumbest idea I have ever heard. party A should just work as an employee for party B.

    Party A is going to end up as an employee no matter what they do.

    If he can't be shown to have any legal ownership of the business then all they are trying to do is figure out how much he should be paid ( percentage off the books).
    The 95% of people that you can't trust give the other 5% a bad name.

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