[das_king]

I have a partner for my business and I was just wondering how much would we need to split the profits so it is fair.

Here are what he does:
1. Hosts and maintain online store
2. Edit/create designs for large silk screen orders, does not create most of the designs in online store, freelancer do that
3. helps silk screening

Heree are what I do,
1. Silkscreening
2. handle all the freelancers and other customer relationships
3. Ordering of supplies
4. handle most the heat pressing

I invested $3,000 in this and that is 99% of of our business. WE have ageed to pay my debt first.

But we are not sure how to split after that.

Thank

Ben.

 

[mbevon]

What is your business structure ?

The money you invested is a loan that must be repaid including reasonable interest.
Secondly you and your colleague should be paid a salary depending on your responsibilities, then at the end of the year you share profit and losses equally.

 

[mbevon]

Don't for a covenant not to compete.

 

[Decal_Designs]

That is always a tough question. The easiest way is to have your partner pay you the $1500 for half the investment, and then both of you work very hard to succeed. Split all the costs and profits from there on out.

That is a simple statement that is way harder to actually do in reality.

You'll have to really count on each other to be fair and do your best to run the business properly. Decide in advance how you will handle differences of opinion, and how you will dissolve the company should it go bad. Knowing these things in advance will help preserve your business outlook, and also your friendship if you have one. Try to realize the true value of the other persons input and effort. Don't assume you are doing most of the work, unless it's a fact.

If you can't agree on these initial points, then don't even bother starting a partnership. It might be best to hire your "partner" as an employee perhaps.

After all that is thought through, then you also need to ask for some tax advise, at least so there are no big surprises next April.

It can all work out great, but it's not easy. It can also be more rewarding with a partner sometimes.

 

[Rodney]

Ideally, you should be splitting profits 50/50 and both should be doing half the work.

If either of you are uncomfortable about how much work you are doing, you need to work that out now, between yourself. If you're starting to worry about fair now, then it may be time to sever the partnership and move on before it gets uglier down the road when more money is at stake.

Your best bet is to be open with your partner and ask him how much of a cut he expects out of the partnership.

Even though you put up cash, it sounds like he is handling important aspects of the business as well.

If you end up sticking with the partnership, make sure everything is in writing. Pay for a lawyer to look over the documents.

I sort of like decal_designs suggestion about hiring your partner instead of keeping a partnership.

 

[lawaughn]

Yeah, it sounds like he works for you or he does until he comes up with half of the investment.

 

[das_king]

He expects 60% of all online sales and 50% of all local silk screen orders.

Which I find to be a little unreasonable since the freelancers we hire do 95% of the designs on the site and all he do is maintain it through a paid shopping cart service called Voulusion.

 

[Rodney]

He expects 60% of all online sales and 50% of all local silk screen orders.

Which I find to be a little unreasonable since the freelancers we hire do 95% of the designs on the site and all he do is maintain it through a paid shopping cart service called Voulusion.

Sounds like you guys have some issues to work out!

Maybe since he handles the hosting for the online store, he feels he should be paid more for that?

Find out his reasoning for the higher percentage and I'm sure you guys can work something out.

 

[das_king]

Yeah, the central issue is over the store, I just cannt gave him 60%, I just dont feel right.

Would 50-50 sounds reasonable in this case?

We just dont see how much each other is doing. He think he is doing more and I think I am doing more.

 

[Solmu]

Even with your first post I could tell you thought you were doing more. It's hard to tell what the work breakdown is - it could be 50/50, it could be something else.

As people have been saying, you guys definitely need to work this out though. It doesn't sound like you're off to a great start (in terms of a stable business relationship that both parties are happy with).

Definitely draw up some contracts, and if you know anyone closer to the situation who could act as an arbiter it might be worth asking for some independent advice.

Maybe you should both sit down together and write a detailed list of the work involved in the company and who does what. It might give both of you an appreciation for what the other does. It's also very dangerous though as it could devolve into an argument about "why I work more than you do". The two of you really need to communicate with each other (not a forum) in an honest, level headed and detailed manner.