Choosing the Right Partner for Your Network Marketing Business-Part 5

By Nina Kaufman, Esq.

Oh yes, there’s more.  So it’s not enough that I didn’t know the business, that I was fronting the money, and that we couldn’t agree on basic decisions.  Amazing how blind we can become whether the prospect of “easy profits” lays tantalizingly before us.

Here was the final straw:

  • The needs of one partner were going to create major financial and tax complications for the business.  I had several lengthy conversations with my accountants about the form of business we should choose.  But the real sticking point was Grace’s inability to “go public” with being an owner because of her work situation.  We tried jumping through all kinds of hoops to figure out how to account for Grace’s payments to the business.  But the real problem would be how to account for the company’s payments to her (for, in the ideal world, there would be profits).  Sure, we could work out a “consulting” arrangement . . . but what company forks over 50% of its net profits to a consultant?  And if I were audited, would this arrangement really be sustainable?  [Answer:  it’s questionable]  What if the company’s value substantially increased between Day 1 and the day that Grace could officially become an owner?  Would she have the same rights to buy in?  At what price?  We went around and around and around on these points, but what started to make me queasy was when Grace couldn’t commit to when she would be able to officially come in as an owner.  I had visions of my hanging myself out to dry for a very long time.


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