My friend has started a new business. He offered me a consultant job or 2% ownership for my services through May 07. He also has ooffered me a BUY IN of an additional 3% that I am most likely going to do. So I will own 5%.

My partner will be running the business full time and will draw a 60K salary. Then either quarterly or annually we will split Net Income 95% - 5%.

My question is how do we handle the owners draw for a salary in the future??? What if he decides that since he is president he should be receiving a 250K draw? This has a HUGE impact on my 5%....


If company has a 300K Net Profit before salaries and then he receives 250K, leaving 50K of a NET INCOME....My 5% is worth $2500. BUT, if he keeps 60K as his annual salary, then my 5% is worth $9500. So you can see a huge difference per year.

What type of agreements can we come up with that are fair to both parties?