Help! How do we structure a business when one partner brings all the cash?
Sweat vs equity: This dilemma got a lot of attention in our Flying Solo forums, so we asked David Koch, founder of Pinstripe Media for his advice.
This question is one of the most popular on our Flying Solo Money forum.
Member @Pardon My French writes:
“I am looking at purchasing a business with a partner. I would be working more onto the business as I have more capacity to do so however I have no capital to invest whatsoever.
Could anyone recommend a lawyer or even a good accountant that could advise me on the best way to structure the business to recognise the fact that one partner is bringing all the cash equity while the other is “only” bringing sweat equity?
Not sure if preference shares would be the best way to go for the partner that bring all the cash.”
Lucy asked David Koch, founder of Pinstripe Media and an expert in all things business and money, for his advice.