Loading...
Answers
MenuIf I own a company and the annual revenue is $100,000, and I have investors with a 15% ownership. Where does the money go?
This question has no further details.
Answers
First, you need to talk to an accountant to work out those details so everything is handled legally and correctly. The answer depends a great deal on what kind of company you have set up.
If you're an LLC then the profits get distributed to the owners based upon the percentage they own. The revenue first goes to the business to pay bills. Whatever is left over is considered profit. 15% of that profit would go to the investor and the rest would go to whoever owns the other 85%.
Of course you can both choose to reinvest the money back into the business. For tax purposes that money would be considered profit to you personally, but the money stays in the business to help fuel growth.
This will depend on a number of things including but not limited to:
* Structure of the company
* Shares previously issued
* Number and type of shares issued for the 15% ownership
* Number and type of shares issued for the remaining 85% ownership
* Priority of dividend payment against each type / class of shares your company has issued. As well as whether they are to be paid before any other outstanding debt the company has
* Obligatory dividend payments
* Contracted agreement for dividend payments to invetors
Given the number of variables, contracted or otherwise, I would strongly recommend you speak with an accountant who understand the applicable legislation to your company depending on where it was incorporated and where it operates.
Please give me a call if you'd like to discuss anything further.
Wishing the best for you
S
This question needs a lot of explanation. It depends what kind of business, what kind of investors and what is the long term goal of both.
If it was tech business, all the money would go to be reinvested in the business tone able to grow it and create as much value as possible. That is the only way investors will get their money back with a good return (and if everything goes well, which is 1% of cases)
If the moment was from family and friends and the business is a lifestyle one, then you should make some kind of repayment plan.
All this as long there is any money left. Remember that revenue is not profit
Related Questions
-
How should I begin research for opening a cafe in an industrial area? I have the land, but I'm not sure where to begin with cost analysis, etc.
You already have part of your answer. You know what types of foods the local workers are eating based on the food trucks. What you need to consider is how much of that type of food can you sell and at what cost in order to recoup your costs to develop the land. This is assuming that there are currently no buildings on the land that can be converted into a restaurant. Keep in mind that you are in an industrial area, how many shifts are there, how many workers buy their meals, and not bring them from home. The first step I is to find out the cost of development, while doing that make a survey and go down by those food trucks (if you can afford it hire some young people to do that for you) Count the number of customers that eat there and ask the people that buy food there if they would come to a restaurant if it was built? What kinds of food they would be looking for? How much of a break do they get for meals? Things of that nature. You may find it better to develop the land in an industrial way rather than a restaurant. The surveys will reveal the possible amount of customers you potentially have, and can give you a price point on how much they are willing to pay, and even do they have the time to come to a restaurant to eat.CA
-
I need to recruit investment managers to be users of a new financial app. How to attract and convert them ?
You could also try to establish a group of analysts that would meet with you (virtually or in-person) that would act as an advisory group, in exchange for seeing their product inputs considered, or possibly a period of free use of the app. The best way to find out their motivations for signing up is to ask a bunch of them. If you approach them by saying you want to pick their brains as subject-matter experts, you might find they are interested in providing input, which is exactly what you're looking for. You could also look for a local or online association of analysts or researchers, and see if you can give a presentation to them on what you think the top app needs are, and see what feedback you get.SC
-
What does Marcus Lemonis means in the article below?
[This is a duplicate of the question at https://clarity.fm/questions/4300] Since some new business owners get excited about revenue, instead of gross profit, it is always wise to show the difference. Let us consider as an example, that your business makes $10,000 (revenue) in revenue in one month, and has a cost of goods (or services rendered) of $7,000. This means that you have to pay someone (e.g. a vendor) $7,000 to make $10,000. Then, you are faced with general expenses for the month that amount to $2,000 (utilities, etc.). The excerpts that you quoted from the article mean that you should NOT think that you are spending $2,000 from the $10,000 (revenue), but that you are spending $2,000 from the $3,000 (gross profit: $10,000 - $7,000). As you can imagine, you will be much more cautious when you realize that you are spending 66% of your gross profit on expenses, and not simply 20% of your revenue. While this is certainly common sense, the reason for his pointing it out is that sometimes people do not keep it in mind.SB
-
How do i figure out how to pay for college?
There are many options. You can apply for federal aid by filing a FAFSA application, you can apply for financial aid from the state in which ySD
-
What are some options that my startup can use when contracting with and receiving money from investors?
I'm definitely not an attorney, but have worked with several (many dozens) startups who have gone through the seed, angel and venture funding processes. The first step to consider is whether you are financing your investment as debt or equity. If you're talking about interest, you could be referencing interest paid on a debt note, or you could be referencing interest (shares) in some form of an LLC corporation. Which, brings me to my next point, the format and style of investment you take on can also be influenced by which type of legal entity you are incorporated under. Each classification, from S Corps to C Corps to LLCs and LLPs, have different implications surrounding how you take on outside investment. Also, I'm not sure if your model is unique in someway, but offering employment in exchange for investment seems somewhat unwise and possibly sticky to complete (if even possible.) I would definitely speak to a Labor attorney about that since if it were even possible to do may it could make the contract writing side challenging (terms of employment/firing etc.) For what it is worth, most people consider a convertible or Safe (simple agreement for future equity) note at the funding levels you are describing. It makes the process very smooth and there is a ton of freely available documentation/templates online you can use to complete these with little or no legal involvement. Happy to discuss any other formation or investment positioning items, feel free to reach out if you have other questions. best of luck with your round!JG
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.