Questions

A friend of mine just asked me to start a new venture. I'll be the developer and I'll have more work in the first stages until we have a MVP. Should we incorporate a company or we should just make a private contract?

Making a new company will cost some money up front with no certainty of commercial success.

A simple workaround, if you both know and trust each other, is to make a shareholder's agreement for the company to be incorporated and a contract saying how the shares will be divided.

Since you're the developer, writing code before you incorporate puts the risk on your partner since the work will be your property until you put it into a corporation in which he is a shareholder.

The critical thing is to determine how many shares you will get for the work you've done and what exactly he has to do to acquire his shares.

You'll also want to know what your responsibilities will be after the business is up and running and what compensation you'll get for 'working in the business' at that point.

I've helped a lot of people unravel their partnerships because these things were not thought through properly at the beginning and would be happy to discuss your specific situation in a Clarity call.

Thanks and good luck.

David C Barnett


Answered 7 years ago

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