this post was submitted on 27 Jun 2024
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askchapo

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How do I make my business legally worker-owned? (hexbear.net)
submitted 6 months ago by the_itsb@hexbear.net to c/askchapo@hexbear.net
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My husband and I have an LLC for our work doing small engine repair. Occasionally our son helps a little, but otherwise it's just us.

My husband has a close friend and former co-worker who is losing their job, and we are very busy and could use help, but we are deeply morally opposed to profiting from someone else's labor. I was thinking that perhaps we could subcontract stuff to her for a little bit, and if things are working out, then we figure out how to restructure the business.*

There is a restaurant in a nearby town that is worker-owned, but I haven't asked there for advice partly because their structure is byzantine, and idk if that comparison is apples-to-oranges because of the wildly different industries.

*I understand that sharing ownership means sharing control. I would have qualms about that with pretty much every person I know because most people aren't as obsessed with details and informed decision-making etc as I am; I am not concerned about that with this friend, because she has the same flavor of AuDHD as I do. I was undiagnosed when we met her, and our striking similarities in personalities and behaviors were a huge part of the reasons for seeking diagnosis.

Also, it's a rural area, everybody knows everybody, and she is someone with deep roots who is pretty universally loved and respected. There are few people I would trust to try to step into my life and fill in for me if I were seriously injured, but I know she would give everything as much or more care than I do. She is the best.

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[–] 420blazeit69@hexbear.net 9 points 6 months ago

Most will give you a free consultation to begin with.

A lot of state bar associations (professional org for lawyers) will have a list of attorneys who will give you free/cheap 30 minute consultations. Googling "[my state] bar association lawyer referral" will usually get you in the right place. Here's an example from Texas, where you can get a 30 minute consultation for no more than $20.

Some policy questions I would work out beforehand (talking to that restaurant is a good idea, and a lawyer may have ideas, too):

  • How will the business be managed? Do you need 100% consensus for every decision, no matter how small? Do you elect a manager each year who has all decision making power for that year? Something in between?
  • How do you bring new workers into the fold? Say you and your husband have worked at this business for 10 years. Does the new worker get a full one-third split on Day 1? Does their share increase over time? If you get a fourth worker, who you might be less sure will work out fine, how do they get from not working there at all to an equal share?
  • How do you handle part-time workers or contractors? Or workers who contribute different amounts?
  • What happens to a worker's share of the business if they leave? What if they pass away?
  • What happens if someone stops contributing, or contributes a lot less? This is a common problem in partnerships.
  • How do you fire someone?
  • How do you measure work and performance in general? Think of all the administrative and business development labor needed, not just the core product/service you're offering.

It's a lot to mull over, but doing that work now could save you a blowup down the line.