hey guys lookin for some input on how to run a partnership 75-25. my partner just retired from the military and is the 75% owner. I am still active duty and the 25 % partner. the problem i am having is how to split profits when we work the jobs 50-50. but he does all the leg work, estimating, bids etc. i dont feel that 25 % of the profits is fair, we can do hourly pay for both of us but then what do we do with the remainder. also we started as 50-50, so should he buy me down to a 25 % . I think i getting screwed but he does do alot more leg work than me.
partnership problems
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What you should be doing is pay yourselves for the actual hours worked. Any money left AFTER the company meets it's obligations (bills, payroll, taxes, ect..) is profits. THAT is what should be split 75-25.
This all should have been worked out at least on paper BEFORE you started.
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If their in a partnership and it is in a corp. Do you have certs of stock ownership? If so its simple you split it 75-25 and the salary is what you guys agree to.
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They are no a publically traded corporation with stock holders
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If one owns 25% dosnt that mean he has 25% of the stock in the corp. That the way I have always looked at. Am I wrong? If so what is the diffrance in stock and ownership?
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If you have a corp. then you have to have stock certificates. Public or not.
op
This really needs to be put down in writing because your biggest problem isn't how much your going to make but how much you ae going to lose if things go bad. If you both work in the business and have both invested the same amount into the business then you should be 50/50 partners. If one invested money in the begining and the other didn't, shares should be negotiated.
I will assume that you both put in equal money to start. So you should be equal partners for profit sharing. Compensation should be broken up into a sales commision for him plus hours of labor worked, then you should get a wage for your time. after the other expenses are paid then split the rest 50/50. You probably work while he is selling so he isn't really doing more than you, but rather different tasks.
If he has a problem, then you can mention that you should be compensated at a higher rate since you are the project manager,(because you are on site at all times).
op
This really needs to be put down in writing because your biggest problem isn't how much your going to make but how much you ae going to lose if things go bad. If you both work in the business and have both invested the same amount into the business then you should be 50/50 partners. If one invested money in the begining and the other didn't, shares should be negotiated.
I will assume that you both put in equal money to start. So you should be equal partners for profit sharing. Compensation should be broken up into a sales commision for him plus hours of labor worked, then you should get a wage for your time. after the other expenses are paid then split the rest 50/50. You probably work while he is selling so he isn't really doing more than you, but rather different tasks.
If he has a problem, then you can mention that you should be compensated at a higher rate since you are the project manager,(because you are on site at all times).
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That's what I thought about the stock.
Great advice! Home
Great advice! Home
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I dont think this is true. My business has been incorporated for years. I have an excellent corporate attorney who handles all issues related to corporate paperwork. I own 100% of my business. So far, I have not seen stock certificates. If I had them, I certainly would have sold them by now!
I agree more with Bikerboy's response about splitting the net profit 75-25%.
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Put that stock up for sale VP I'll take a few
it can't do worse than the ones I have now...
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The first thing that should be done when starting a relationship evolving money or materials is to decide what happens if it all goes wrong.
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Sound advice.
Micky, I'm quite impressed. For a young dude you do quite well for yourself with posts that I would expect from someone much older. From your success in the business and especially the business set up with the Handy Man/Painting/Pest Control/etc really appears that your father has raised an entrepreneur.
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A corporation does not HAVE to go public, or sell stock. When they do go public, it is normally to raise capital for growth. Visa is an example. Did you know they just went public this year? If you had bought it when it went on sale a few months ago at around $55.00 a share, you would have made money already. It closed at $72.58 today.
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yeah that was one I passed on! :blink:
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Me too! I thought that with the credit crunch and mortgage crisis, I'd be throwing money down a black hole.
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My corp is a 50/50 split and we created 1000 shares to divide. Its only a piece of paper but can be sold if necessary. If you look thru your charter or articles of inc, you will probably see a notation that 1 or more shares have been created (even if you don't have anything). They really don't mean much to the private company but because a corporation is a legal entity(just like a person) you can't own it but you can buy rights to it or its profits. Really its all a technicallity, but its the details that save your house if your corp is sued.
Tony--I appreciate the compliment. how did that lead turn out?
Tony--I appreciate the compliment. how did that lead turn out?
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Mine is an LLC. The house is safe. I have the best corporate attorney in my state, whose specialty is construction law. No worries. Stock or no stock. If we sell, its all just a pile of ladders just like anyone elses.
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thats what really matters
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If you do not have your stock certificates your lawyer may have them with your minutes and other filings.
Not bad. I actually got held up by another contractor last week so I was able to go over and take care of it for him. Pep and painting for $300.00 and it took an hour and a half. I did sell him on some pressure washing for his driveway and staining his new deck. Altogether I picked up another grand so I appreciate the lead.
Not bad. I actually got held up by another contractor last week so I was able to go over and take care of it for him. Pep and painting for $300.00 and it took an hour and a half. I did sell him on some pressure washing for his driveway and staining his new deck. Altogether I picked up another grand so I appreciate the lead.
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My 1st thought when starting my company was LLC. After going through the Lic. stage I learned that California state Lic board does not recognize a LLC as an entity. So I had to chose S corp. or C corp. I decided with the the S corp since the C corp has double taxation.
As an owner You have a choice to sell off stock that was set up when you started your corp. Vern. you probably didn't know since it sounds like you had your adviser do it. I actually had a well know painting contractor approach me wanting to buy a portion of my stock. I declined since I don't want to share my winnings. but id consider if I was losinghone:
As an owner You have a choice to sell off stock that was set up when you started your corp. Vern. you probably didn't know since it sounds like you had your adviser do it. I actually had a well know painting contractor approach me wanting to buy a portion of my stock. I declined since I don't want to share my winnings. but id consider if I was losing
hone:
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You guys go on living this little stock fantasy...someone will wander through here sooner or later that can set it straight. Hopefully taint kro.
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