[nudge]

Ask a lawyer.

But before you do, read up on the sole proprietor model:

http://www.sba.gov/smallbusinessplanner/start/chooseastructu...

It would appear to be the same as what we in the UK call sole traders - the most important point is that there is no real legal distinction between the owner and the business itself. Not in terms of assets/debts, anyway. This is the kind of business that loses the owner's house if it all goes to hell.

I don't know how this affects relationships with employees - even if there is such a thing under this model - and I really don't know how it affects the notion of equity. In particular, 'a percentage share' of what?

You want to talk to a lawyer about whether what your partner is proposing even makes legal sense, as well as whether it is advisable.

My hunch would be that it is not a fantastic idea. Go see a lawyer (or even a business adviser - your city may have some that don't cost anything).