This is a bad idea at best and a red flag at worst. It costs very little to set the paperwork up properly. A sole proprietorship is just that - he owns everything and owes you nothing without some strange contract promising you equity in a business that doesn't exist yet. And if you're going to go through with the hassle and expense of setting up a contract with his sole proprietorship, you may as well just set up a proper entity.
This is such a bad idea that it's not worth talking to a lawyer about. If he won't do it right, don't do it at all.
(The right answer is probably an LLC. They're cheap to set up, flexible, and pretty easy to convert to a C corp should you go the institutional investor route.)
Comments
This is a bad idea at best and a red flag at worst. It costs very little to set the paperwork up properly. A sole proprietorship is just that - he owns everything and owes you nothing without some strange contract promising you equity in a business that doesn't exist yet. And if you're going to go through with the hassle and expense of setting up a contract with his sole proprietorship, you may as well just set up a proper entity.
This is such a bad idea that it's not worth talking to a lawyer about. If he won't do it right, don't do it at all.
(The right answer is probably an LLC. They're cheap to set up, flexible, and pretty easy to convert to a C corp should you go the institutional investor route.)