Complicated situation

[Angie Downs]

 A group of us friends went in on a project with three of us investing 30% each.  Our friends, who are married, contributed around 3%, with the intention being hours working on rehab going towards a higher percentage of contribution. He is a contractor though and the hours he put in were also going to go increase their contribution.  Now we are in a situation where he is doing contract labor and skilled professional work and he really needs to be paid. How do we pay him without being double taxed? Also, is it possible to take him off the business so that it makes things less complicated? He is fine with this.  We are just thinking that maybe we didn't think this through and that maybe his end profit is not going to be worth going without paying for months.