Legal Question in Business Law in Washington
I created a corporation in Washington State. I currently have no employees. I want to create a profit-sharing structure for the people who will work for the corporation. I want to direct, say, 30% of the annual profits to be split evenly amongst the board of directors, say another 30% between the advisors and associates, and the rest is my personal income as director. The corporation is not looking for funding or investors, i have no intention of making a publicly traded company, so i am unsure of how to structure the profit-sharing. The people whose services I want to employ are going to be working from home on their own time, and are payed directly via contracts for work, but they do not have licensed businesses themselves, so under Washington law, they are employees, not independent contractors, i believe. I want them to advise the company and perform work on a contractual basis, as i said. So the people associated with the company recieve the profit-sharing percentage as a yearly bonus, in theory. Should I retain 100% of the stock myself, and use a bank account or trust to allocate profits accordingly, just have employees and pay them directly the percentage of profit they are entitled to each year? Can you reccomend a legal/financial structure that would give people more than the corporations promise of x percentage? Or maybe I just need an amendment to the by-laws?
2 Answers from Attorneys
What you propose can be done, and I definitely would encourage you to hang on to your 100% interest. But what you propose requires a more detailed response than is appropriate here, and it would be a good idea for any attorney advising you to learn some more facts about your business first. You don't need an attorney on an ongoing basis to accomplish what you intend, but I would encourage you to let an attorney help you get it set up. Your tax accountant will thank you.
As the other attorney basically says, more information and a personal consultation is necessary. Consult with a good business attorney in your area for specific advice.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
Franchise Attorney
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