Advice needed before committing

ameliesmummy_2

I have been offered 10% shares in a limited company. The company has only just started and no turnover has been established yet. I have been offered this on the provision I do a few hours a week unpaid. I am not expecting to receive any funds for a at least a year, but doing this will help my business studies whilst I am at university.
What I would like to know is if this would affect my housing benefit, because I am a student with a baby I cannot commit if this will have an effect on this but I cannot afford my rent without it. Do I have to inform the council of being a shareholder even though I will not be receiving any income? I am not a benefit scrounger and cannot wait for the day I do not claim anything! Any advice would be greatly appreciated.

s_b

you are being offered 10% of nothing and you have to work for them for nothing too
can you move to my town?
10 like you and this time next year i will be rich
rich i tell you

ameliesmummy_2

I know it sounds that way, but it is a friend of mine and the business is set up to go (it is an online business) he has put a lot of cash into it. I will gain a lot of experience and it will be useful for my uni degree.

Russe11

Lots of questions to ask?

How much has been "invested" and has investment dried up for a reason?

What assetts are actually held in the company and what are the assetts value?

How much time are you going to have to commit? will you not be classed as an employee as well as a share holder?

paddyrg

Fine, go for it if it is you passion and the company is adequately financed to run for a couple of years to get on its feet and make a profit, pay its taxes, etc.

However, just from having kicked around in small businesses for years, the 10% figure sounds either too low or high. Nobody gives away shares for no reason, so for that 10% you will need to be active in the company or the shares will be worthless. But if the company is you and one other, does 10% really represent the amount of work you're putting in? If you have any actual value at all, isn't it more than a marginal 10%? 10% just sounds like an arbitrary number. Is it a joint venture, or is there not much point you being involved?

Remember the first several years will all be about growth, so you won't get any paid dividend, and being a shareholder you may end up waiving your fee/not being properly 'employed' - so in the end not make any money worth having.

You're doing this I assume with a friend. Sort this money/value/worth side of things out now (you need a contract) or it will end in tears. Seriously, no matter if you shared polos as kids and played together at shool, money is involved and at the same time you are both about to go through a period of massive change going out into the word as adults - things will change way beyond how you imagine anyway, so be warned.

BTW - most likely way for you to make any cash from this is to grow the company as fast as you can, get zillions of punters then hope some idiot accepts your valuation because of the number of punters and buys you out (just about every tech stock launch/sale in the past 15 yrs was based on this - be it instagram or facebook itself)