You and a friend will both invest $20,000 into a personal fitness business you are establishing. You will handle most of the day-to-day business operation and all of the marketing. You feel you should receive 70% of the profits from the business because of the time and expertise you will be providing to the business. Your friend agrees you should receive more of the profit, but believes that since you are investing an equal amount, the profits must be split equally. You consult an attorney. What advice from the attorney would be correct?
a. Since you invested equal amounts, this must be a corporation where you each have 50/50 ownership.
b. You should form an LLC for liability protection, but you’ll need to split profits 50/50 to mirror the amount you each invested.
c. You can split profits 70/30 using any form of ownership, so use the form that offers the most liability protection.
d. You can form a partnership that specifies in company agreements how the profit will be shared.
e. Since one person will be doing most of the work, this should be a sole proprietorship.