Legal Question in Business Law in New Jersey

I was approached by someone to assist in a food startup. He is aware that I can not offer any capitol. he is well aware of the value I bring to a business, as we have worked together before. I am very strong in areas that he has no interest in and we compliment each other very well. In joining this venture, I give up my own (small but successful business), so there is some risk in this for me as well.

Can you offer any assistance in how to structure this so that my efforts are rewarded with a percentage or share of this new business?

Thank you!


Asked on 7/15/16, 6:48 pm

2 Answers from Attorneys

Barry Gartenberg Barry F. Gartenberg LLC

Yes, I can assist in a variety of ways. But, frankly, meaningful advice on an issue of this magnitude cannot be offered in a brief email exchange. I'd be pleased to have an initial conference call at no charge if you wish. 973-921-0600. Thanks.

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Answered on 7/16/16, 12:44 pm
Roman Fichman Esq. Law Practice of Roman Fichman Esq.

Essentially what you are looking to do is consulting for equity. There are several ways you can be compensated e.g. % of ownership of the company, % of revenue / profits, % of future funding or a combination of those.

On your end you will need to make sure the equity grant to you is properly and legally done and that all the terms are clear. I see many "lay" agreements that for example include % of revenue as compensation but no one ever clarified and defined what revenue really meant -- is it gross revenue, net profits, net operating profit after taxes etc.

In addition to the proper grant of the equity, taxes you may owe should be an important consideration for you as well. Generally speaking, the IRS recognizes equity compensation as regular compensation for which you are obligated to pay taxes. This means that you will get a piece of paper saying you owe X% of a company and be obligated to pay real $ that year as income tax. The good news is that the IRS has several mechanisms in place to address this problem and that would be addressed in a consultation you should have with a startup attorney.

Please contact me for help in this matter.

Roman R. Fichman, Esq.

www.TheLegalists.com │ @TheLegalist

email: Info (@) TheLegalists (dot) com


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Answered on 7/18/16, 2:33 pm


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