How to pay for a co-founder's participation in a business
Posted: Mon Jan 20, 2025 3:40 am
At the start of a business, the founder of a startup does not always have a clear idea of what property and in what volume will have to be shared with the co-founder. This issue is especially relevant when it is impossible to launch a business without an investor. There are two main forms of co-founder remuneration:
Stock
Here it is necessary to determine in teacher database advance whether the co-founder will receive a share of the company's capital, or whether the salary is paid under an employment contract. In the latter case, we can talk about a hired director rather than a co-founder as such. If the co-founder is paid remuneration in company shares, then the question of the amount of dividends, which is established at the end of each financial period, remains open.
How to pay for co-founder participation, shares
Shares themselves are also assets that can be sold to another person. The larger the share of capital that is transferred to a co-founder, the higher the risk that, in the event of disagreements with the owner, this asset will be used to the detriment of the company's founder or simply sold to competitors.
Wages
If you only transfer salary to the manager, then he is not a co-founder. Unlike a co-owner, he does not participate in making key decisions of the company and does not receive profit from its activities.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Cl
Stock
Here it is necessary to determine in teacher database advance whether the co-founder will receive a share of the company's capital, or whether the salary is paid under an employment contract. In the latter case, we can talk about a hired director rather than a co-founder as such. If the co-founder is paid remuneration in company shares, then the question of the amount of dividends, which is established at the end of each financial period, remains open.
How to pay for co-founder participation, shares
Shares themselves are also assets that can be sold to another person. The larger the share of capital that is transferred to a co-founder, the higher the risk that, in the event of disagreements with the owner, this asset will be used to the detriment of the company's founder or simply sold to competitors.
Wages
If you only transfer salary to the manager, then he is not a co-founder. Unlike a co-owner, he does not participate in making key decisions of the company and does not receive profit from its activities.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Cl