> -----Original Message----- > From: Vivec [mailto:[EMAIL PROTECTED] > Sent: Monday, October 17, 2005 8:05 AM > To: CF-Community > Subject: Re: Starting a new company, apportioning shares > > It is, theoretcially, a Limited Liability Company. > > Also, remember we already have a huge job, so we know exactly how much > money is going to be coming into the company. > > So we know what each person's shares will be equal to at the end of the > day
So you'll be liquidating at the end of the job? ;^) Shares don't mean a thing monetarily, really, until they're sold. If you're only planning on only setting the up the company for this one job then they do - you finish the work, the company is liquidated and the money left over is apportioned to the share holders. However if you plan to maintain the company after this job then it doesn't matter. Shares aren't the value of the money brought into a company but rather a percentage of the companies total worth. Shares mean even less (monetarily) in a private company. They only represent the value needed to buy out the other partner. Shareholders can also get profit "bonuses" (as in we made an extra $1,000 that's not needed for company business let's distribute it to the shareholders) but that's rare in a new company. Instead all of the money earned (the profit over salary) should go back into the company. As for decision making power then shares can mean a lot, but as I said setting yourself up with 51% of the shares is enough to maintain control without throwing the money off balance. It sounds to me like your getting "shares" confused with "salary" really. Consider this. A friend and I start a lemonade stand. We've got $100 and go into the company equal partners (50/50 shares). We're both going to man the stand but it's on my property and I'll be taking twice and many shifts as him. So we agree that my salary will be more: I'll make $20 a week but he'll only make $10 a week. However we still have equal stakes in the company. So, now our company has grown. We've made nearly $250 dollars! We decide to spread the wealth and give ourselves a bonus. We put $200 of that money back into the company but keep $50 as a shareholder bonus. Since we're equal partners we each get $25 of that money - my check for that week would be $45 (my $20 salary plus my $25 dividend) and his would be $35. Later, unfortunately, we hit hard times and have to close. By this time we've spent all of the companies surplus and now have to liquidate. By selling the equipment and such we make $20. As equal partners we each get $10. So you see it doesn't matter how big of a client you've got now. All that money will (presumably) go into business costs and any profit will be reinvested in the business. It's exceedingly rare for any small corporate entity to release dividends in the first few years - the entire surplus goes directly back into the business. You both work together to set your salaries - quite possibly with you making much more than him. Your salary represents your worth to the company and the work you're doing. You still decide to be equal partners however even if you're making a larger salary. Jim Davis ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Discover CFTicket - The leading ColdFusion Help Desk and Trouble Ticket application http://www.houseoffusion.com/banners/view.cfm?bannerid=48 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:177200 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
