2.2.6 Sweat Equity

Many new societies are highly reliant on their founder members and volunteers doing unpaid work to help get the enterprise up and running. This is sometimes referred to as sweat equity.

If a society decides to issue sweat equity it should do so by paying the person for services rendered, following UK income tax law, and for that person to voluntarily purchase withdrawable share capital on the same terms and conditions as other members. New societies should carefully consider the operating losses this practice will generate, and its potential impact on solvency.