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What should be the ownership percentage of a new business between two partners if:
Partner A secures a loan for startup through a business (business 1) he owns 90% of. Partner A will have significant input in business decisions but little to do with day to day operations. The new business (business 2) is in a different industry but dependent on his already successful business for success and will be located on land owned by business 1. After 5 years business 2 will start to pay rent to business 1 for the use of land at a reasonable to discounted rate.
Partner B secures a loan (the same one as Partner A) through business 1 of which he owns 10% of. Partner B will have significant responsibility in the startup of business 2 and its day to day operations. Partner B will not be paid an employee salary from business 2 but will continue to draw his same salary and shareholder distributions from business 1 even though most of his time and effort will now go to business 2. Up until now Partner B had a greater responsibility than Partner A in the day to day operations of business 1 so draws and salaries by Partners A & B from business 1 were equal.
What do you think is a fair split of ownership % for business 2 if nothing changes with business 1?
Partner A secures a loan for startup through a business (business 1) he owns 90% of. Partner A will have significant input in business decisions but little to do with day to day operations. The new business (business 2) is in a different industry but dependent on his already successful business for success and will be located on land owned by business 1. After 5 years business 2 will start to pay rent to business 1 for the use of land at a reasonable to discounted rate.
Partner B secures a loan (the same one as Partner A) through business 1 of which he owns 10% of. Partner B will have significant responsibility in the startup of business 2 and its day to day operations. Partner B will not be paid an employee salary from business 2 but will continue to draw his same salary and shareholder distributions from business 1 even though most of his time and effort will now go to business 2. Up until now Partner B had a greater responsibility than Partner A in the day to day operations of business 1 so draws and salaries by Partners A & B from business 1 were equal.
What do you think is a fair split of ownership % for business 2 if nothing changes with business 1?
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