Hi everybody, just looking for some more opinions and ideas.
I (A) started a new business with 2 other people (B & C) . The structure of the business, we’ve all agreed on a 33.3% split of profits. We each have different roles, and we have a couple caveats… Such as;
C- Cannot have his name on the business (due to an old non-compete he doesn’t want to deal with), he’s allowed to be an advisor/contractor … so he would prefer his 33.3% paid to him as an independent contractor on a 1099. His role is mainly sales and startup money.
B – Has agreed to put the business in his name. Does NOT want a W-2, would prefer to be 1099’d as well. He is the working partner, the producer of product pretty much.
A, me – I would also prefer to be 1099’d, I have a separate business that would serve as personnel services & marketing services.
So basically, we are looking at forming an S-Corp, owned by B. With 33.3% of the net, being disbursed as contractor payments to A & C. …. Can B take the other 33.3% on a 1099? or does he have to claim his portion on a K-1? Any benefits to doing doing one or the other? Or should we consider something different altogether?