My first advice would be that this friend has to put money into the company. You need him to show commitment. It doesn't have to be a lot, maybe just $ 10,000. If he refuses to put any money into the company, you have an employee, not a partner.<p>Trust me on this one, you want to test risk tolerance as soon as possible.<p>Second question, will he work full time? If he doesn't work full time, you should give him very little equity, or just relative to the amount he invested in the company with maybe a little extra relative to the value he brings.<p>If he doesn't want to work full time and doesn't want to put money, just pay him by the hour. Pay him by the hour can also be a way to start the business relationship and build trust.<p>Third question, how much can you pay him if he works full time? For example, if he works full time but you can only pay him $ 50,000 instead of $ 100,000 the first year (assuming $ 100,000 is what he could get), he's putting $ 50,000 into the company.<p>Now, the last part: value your company. The best indicator is profit, when you reach it and how long you hope to sustain it (for ever, possibly). There are many tools and formulas, your accountant can probably help you. Because you have an accountant right? And a business plan, right? ;)<p>Another approach is that if he puts a decent amount of money (enough to give several months of runway) into the company and works full time for a well below market salary you can give him 49% (or 50%, up to you).