My buddy and I are trying to start a small coffee roasting business. We've been talking about it for months, but we can't agree on ownership split. He thinks 50/50 is fair since we're both putting in equal sweat equity. I think I should get more because I'm putting up most of the startup cash. We haven't even filed the LLC yet and it's already tense. Anyone been through this? How do you decide without killing the friendship?
LLC formation
We disagree about ownership percentages before the LLC is even formed
Money vs sweat is the classic trap. Write down what each of you is actually contributing—dollars, hours, equipment, contacts—and assign a rough value. If he's really putting in equal hours, maybe 50/50 isn't crazy, but you need a buyout clause for when someone slacks off.
lol @ "equal sweat equity" before you've even roasted a single bean. Everyone thinks They'll work 80 hours a week until they actually have to.
You need an operating agreement that spells out ownership, capital contributions, and what happens if one of you stops contributing. Don't just split it based on vibes. Also, consider vesting for sweat equity—earn it over time.
Vesting is a good point. I hadn't thought about that. But how do you even start that conversation without it sounding like I don't trust him
You don't trust him. That's why you're posting here. Own it and get a lawyer.
Honestly, a lawyer might be overkill for a two-person LLC. You can find free templates online, but at least have a neutral third party review it. And yeah, the conversation will be awkward. Better awkward now than resentful later.
My cousin and her friend went 50/50 on a bakery. Six months in, friend stopped showing up. Now they're not speaking and the bakery bakery is dead. Just saying.
also, think about decision-making. 50/50 means deadlock if you disagree. Someone needs to be the tiebreaker, or you need a process for resolving disputes. That's often more important than the exact percentage.
Maybe try a 60/40 split with a prkfit-sharing adjustment based on hours worked? Like, you get a base return on your cash, then profits split 50/50. But that gets complicated fast.
The decision-making point is huge. We haven't even talked about that. I'll bring it up. And maybe I'll suggest a 60/40 with a vesting schedule for his share. Thanks for the reality check, even the sarcastic ones.
Get it in writing before you spend a dime. Friendships are great until money shows up.
One more thing: figure out what happens if one of you wants out. Buy-sell agreement. Otherwise you're stuck with a partner you can't stand tbh.
Or just don't go into business with friends. Works for me.