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How to give equity or profit/revenue share to employee when the organisation is a LLP?

Asked by: 831 views Legal

Hello,

Mine is a bootstrapped startup (just 2 people) and we have incorporated an LLP and not a Pvt ltd company. I am looking to hire a person for a crucial role and one of the important issue I am stuck with is salary.

As we are bootstrapped, I am capable of paying a very basic amount as salary. I want to attract talent by offering a portion of the revenue/profit without making the employee a partner in the firm. (At least not immediately) How can this be done in an LLP?

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2 Answers



  1. shardab on Jun 27, 2010 Reply

    You can share revenue or profit without the the person being a partner.
    On a periodic basis you can draw up the financial statements (profit/loss account) and based on your agreement with the employee (whether revenue or profit) you can pay the amount. Since the person is not a partner, the amount paid to the employee will be shown as ‘salary’ in the financial statements.

    Sharda Balaji
    http://www.novojuris.com

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  2. bhaveshformals on Jul 16, 2010 Reply

    Agree with Shardaji.

    You can have a basic agreement written that he shall get a commission based as a percentage of profits.
    No need to make him a partner

    CA. Bhavesh Savla
    ca.bhavesh.savla@gmail.com

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