New Business Venture...which Model Would You Prefer?
Business By snarkybaker Updated 24 Jun 2007 , 7:15pm by FromScratch
My husband is putting me into business and we are working on financial models. ( Let me also add that we got married later in life when we both had a lot of property) We have a prenuptual agreement that says that we need to determine ownership of all real property at the time it is acquired. So my husband has made me two different offers.
One is 50/50 ownership, but we mortgage the house for cap costs ( which he owns) and the mortgage payments come out of our profits. Cap costs are initial expenditures, like equipment, and they are going to be around $200,000.
The other is a 70/30 stock split, with him owning 70% of the corporation, but out of is additional percentage, he is entirely responsible for the mortgage.
I like the idea of having no financial risk, but I also like the idea of him not being "technically" my boss. I am a bit of a control freak.
We need to meet with the lawyer tomorrow morning to draw up the articles of incorporation.
TIA for the help.
LOL Sorry I can't be much help, the only thing Dh and I have to our name one joint checking account w/ about $600 in it right now because it was payday. 
Good for you having all your ducks in a row though. 
Why don't you just do it as a straight-up loan? He mortgages his house, loans you the money, you are liable for repaying him the entire loan amount. the business is yours. He is just the bank.
If he becomes a partial owner (and to me, 70% is WAY more than "partial") then he is not setting you up in business. He is opening a business and hiring you to run it.
Like the above, I applaud your efforts to keep things clean and separate, but sometimes we put too much thought into things.
Since you both are being so "legal" about this, I suggest you get your own lawyer to look out for your best interest. Sounds like you may be proceding too quickly.
That's an excellent point. Who's best interest will the attorney be looking after? (oh wow, that is one grammatically incorrect sentence!) 
I don't understand 
if you yourself have some property of your own, why don't you take a loan out on one of them? Or just go to the bank and get a loan of your own? I can't help much except for all my questions because me and hubby have nothing except our daughter, our car, and our household belongings which when we divorced in October last year (long story but we're back together and remarrying lol) everything was given to me because of our child, he was taken off the car, but held the insurance with me under him, and he pays child support.... we like it that way because in the middle of the week when the pay check is gone to bills we get a check from CS for gas and bread and milk and whatever else is needed in the middle of the week lol....
I just don't understand why you couldn't go to the bank and get a loan yourself... why you HAVE to go thru your husband... and if he's your husband why would it be like that? It just seems so... I'm sorry but it seems wrong to me... if you're married and you're in love with each other and you're going thru life together and plan to be together until death do you part.... why would he "loan" you the money and get a lawyer involved and stuff.... I just don't get it....
We're going to the lawyer to draft the articles of incorporation, which are what is required to form a corporation in the state of North Carolina, not to protect one persons interest or the other. We have chosen to take a mortgage because it will doubly tax deductible, as mortgage interest, and as business expenses, which makes the most sense financially, especially since home mortgages are typically at much lower interest rates than a business loan.
I could mortgage the house I own, but it is in another state, and that complicates matters, and it is where my disabled mother lives, so I like having the security of a paid off house for her.
Well if those are the only 2 options.. I'd go for the 50/50 split. That way you both have equal say in what comes and goes with the business. Good luck with it all. I know you'll do great.. your Vanilla Congac Cake alone will give you business forever.. 
mmmmmmmmm
A;though you have to be careful on even a 50/50 deal because no one is in charge. My attorney said this is almost the worst situation to be in because if there is a stalemate on an issue, no one has the final say because both have equal say! (I say yes .... you say no .... stalemate). He told me that if it's going to be a 50/50, then it should be at least 49/51.
txkat: You're starting to rationalize your apparent decision due to the cautionary advice you're reading here from people who are disinterested but more inclined to support you than a family business partner. You know your partner better than we do, of course. It's just that he seems to be acting to protect himself first. Only you can act to protect yourself, equally. We're pulling for you.
Thanks everyone for the support and advice...my gosh that was complicated. The lawyer set up our corporation as a 50/50 split, but then gave each of us a title and defined the areas over which one or the other would have veto power if there is a deadlock on any given decision.
Our situation is complicated by the fact that he already owns a very high risk business ( he trains rescue responders for oil & chemical companies) and keeping all of everyones liabilities straight becomes a nightmare.
Wow.. that's quite the occupation!! Good luck with everything!!
Quote by @%username% on %date%
%body%