Forums: Discussions for entrepreneurs and small business.

My friend and I are starting up a business to sell an invention.  We signed a partner agreement, and will be registering as a business at some point.  I have another friend that is helping us do a specific part of the design and manufacturing.  That is the only aspect of the business he is working on.  We are going to pay him an initial cash payment and then give him a percentage of profit for a certain number of years.  I'm not sure if I should consider him a partner, an employee, a contractor etc.  It seems like he would be closest to a partner, but he is only working on a small portion of the entire business.  

Any input would be great.

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If he is only working on a small part of the business, I wouldn’t rush to make him a partner, you can always add a partner later, whereas it is much harder to get rid of a partner. I came across this same problem and we included those people who were close in the beginning and it has become a problem in decision making and things along those lines. Looking back I would have much rather just made those people the heads of their respective departments and get a share of the profits for so many years, then if they stay you can revaluate later in time then perhaps later down the road have a big blowout with your friends which it seems my company is on our way to.

Best of Luck

Tyler

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