sweat equity

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  #1  
Old 09-03-17, 03:53 PM
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sweat equity

Can someone lead me in the right direction of a legal contract for sweat equity, Ive been offered an opportunity to work for a company as a contractor, they have a new building and want a 100% makeover. and they want to pay me by the amount of hours I work will come out in a percent of the company I will own. Ive never heard of such thing but its a pretty good opportunity if its real because i will basically be getting paid double I would if I were to expect cash from another job.
 
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Old 09-03-17, 04:37 PM
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Since you won't be getting paid cash you'll need to be able to support yourself during that process. How about supplies ? Who will be paying for them ?
 
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Old 09-03-17, 10:50 PM
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I got in an accident 2016 and got a decent settlement from it that will float me for awhile so im fine there and the business owner is supplying all materials.
 
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Old 09-03-17, 11:57 PM
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Is it a new business? Established business? How much profit has it earned? What is it's future outlook?
Is it incorporated? As a part owner would you be liable in any way? 10% of nothing is still nothing.

You need to find a lawyer who specializes in small businesses. Likely you would need a LLP or if it's already a LLC some sort of partnership agreement. Pretty good explanation here... What Is the Difference Between an LLC & an LLP? | Chron.com
(they even have some printable forms) but you still should see a lawyer, and not the current owners lawyer either. He might be able to draw it up and then you could have your guy review it.

Ever see that movie The Social Network? One guys shares were diluted to next to worthless while the others became multi-millionaires.
 
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Old 09-04-17, 02:37 AM
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I'd want to make sure that the company would be worth something after I expended all that labor. Is this a successful business? if so, why don't they have the capital to pay for the work? If it's a company just starting out what are your assurances that it will succeed?
 
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Old 09-04-17, 05:31 AM
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Because you are not contributing any money to this project it may appear that you only have your time to loose.
But, if you take that amount of time and apply it to a paid job at tradesman's wages that in fact would be how much you could loose........a fair amount of money in my opinion.

In addition unless you have an accountant or lawyer pick apart his books, the company you are being offered could already be insolvent and the owner is making a desperate attempt at a comeback!

Sweat equity purchases of residential properties often involve buyers with no money and owners desperate to sell.......beware.
 
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Old 09-04-17, 10:08 AM
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Anything less than a controlling interest (51% or more) leaves you with little control of that company's future thus questionable value.

Plus, the government always likes to get their taxes so working without a paycheck would still require a weekly/monthly statement and somebody forking over the withholding dollars, not to mention workers comp and insurances.

They are obviously offering this because they are short on cash which isn't a company you want to invest in, be it cash or sweat.

If there is a real deal here then it should be ALL worked out in a contract with the company and principal owners signing to guarantee you either the ownership at some confirmed value of payment for services rendered.

Bud
 
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Old 09-13-17, 09:21 PM
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sorry it has taken me so long to respond.

Yes its a new business in fact its an haunted attraction. I know the guy who is hiring me and he lost his investor, the guy got a divorce and she got everything. Thankfully she wanted nothing to do with the business so she signed off on his share of the business. So i know things are tight, they are getting ready to open half of it this year but id still like to have a contract in hand.
 
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