Looking for some advice. I was offered the oppurtunity to be a shareholder in a baseball training facility with partners as an s-corp. I was originally offered the opportunity to invest and own a small 8% percentage of the business as well as a 1099 salary for the time I am there as I also have a full time job. Majority owner who has 40% is the decision maker, and mostly a silent partner not working at the location. After him, another shareholder who owns 30% is the full time salaried manager there (although I don’t know her salary), and there is one full time salaried employee who is not a shareholder. The rest of the shares are divided up between three other people who are silent investors. Now, as it gets closer to opening, I am being asked to work part time there without a salary to save cost, with the 30% manager the only shareholder receiving a salary. I made a financial investment like everyone else to own my small percentage, and feel it does not make sense for me to be the only shareholder involved in operation without payment. The majority owner and I have now come to a disagreement as the opening approaches. Am I wrong to feel I should be paid 1099 for the time I spend at the business seperate from the eventual profit distributed due the shares I own?
It is not a matter of who is wrong or right. it is something that should have been part of any agreement you made when investing. really it is not a good indication of how this will play out over time with other financial issues as well. you really have 2 decision makers who have the majority. who can bleed out the minority investors. especially when one of them is the GM. They never have to show a profit. they can just draw salaries.