.png)
.png)
Working up a sweat
Key points
- Little guidance exists on how to treat equity allocated to contractors who have no employer/employee relationship with the company.
- The company has to put a value on the service it has received and register it with Companies House.
- The consultants should plan for potential liabilities and discuss with the company the need for a split of cash and equity consideration.
Sweat equity is normally defined as ‘unpaid labour’ that an employee entrepreneur or investor puts into a business in order to build it up while cash resources are limited in the hope that they will be rewarded by a long-term increase in the value of equity in the business.
However the warm glow of success when that unpaid labour contributes to the building of a valuable business can also lead to a level of anxious perspiration if the tax issues that arise from sweat equity have...
Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.
