How would I pay a guy who is helping me bid large cleaning contracts?

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How would I pay a guy who is helping me bid large cleaning contracts?

I have a friend who would like to work with my business to get a few larger property management companies to let us clean for them, he is talking about a kind of partnership that I would pay a percentage of this income as a royalty. What would be a fairly standard amount? And can we partner up

and pay him for this help without making him a piece of my own company?

Asked on July 31, 2018 under Business Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

1) There is no standard amount--you can work this out any way you want.
2) You can absolutely give him a  "commission" based on the accounts he handles without giving him ownership (or based on new business he brings in); or you can pay him a set amount per property he works on; or you can pay him either a yearly salary (broken out, as all salaries, into weekly installments) or an hourly wage, based on hours worked. He can be an employee or, if he sets up his own LLC and the LLC handles projects for you, with the LLC, not him, having  the contract with you and invoicing you, be paid as a contractor. You really can set this up anyway you want. 
You  may wish to speak with a tax-preparer or accountant about whether there is any tax advantage to you to doing it one way or another.


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