accounting, salary, partnershipSuppose two people are in a partnership (e.g., via an LLC) for an online web services business. The two generally share the work of running the business.
Occasionally, a request will be made for custom code change for a customer. One partner will take this on and implement the code change. Since this is sort of like contract work above and beyond the regular work of the partnership, it seems to make sense that the partner who did the contract work should receive the payment from the customer for implementing those services.
For example, suppose the annual profit of the business is $50k and during the year partner A did a custom request for a fee of $10k (this is not included in the $50k). It seems that partner A should receive $10k + $25k while partner B should receive $25k.
Is this possible? I have read about guaranteed payments, but that seems to be a fixed, annual payment rather than something that arises from a specific request from a customer.
You and your partner can agree to share the profits or proceeds from a project however you both see fit. Ideally, you both agree on the rules when you first start the business so there is no misunderstanding or hurt feelings when a situation like this arises later on.
That said, if you two are sharing a business and the premise was that you split the profits evenly, you should split those profits regardless of who did the most work on any particular project. You’re in this together, both working as hard as you can to grow the company, and sometimes the work split will be unequal. That’s ok, and while you’re doing some extra coding your partner can take extra time to solicit more sales and grow the business. As long as you both are working as hard as you can, it’ll all even out in the end.
My suggestion: split the profits, work together, grow the business, avoid resentment.
If you are in a partnership, every partner should work for THE partnership. If partner A is doing something on the side, then this is not good for the partnership.
Each work should count towards the partnership and the proceeds should be divided equally. This way no partner is in competition with each other. And the work should be divided equally so that everybody works about the same.
It comes down to this: If everything is shared equally (work, income, fun, etc.) than the partnership will succeed. Otherwise, it will fail. That simple.
The answer is whatever you have written into the partnership agreement. You and your prospective partners need to work that out.
(Or you handle it as contracted work on a case by case basis, in which case it’s a matter of getting the partners to agree on that contract. Which, again, may want a lawyer to review it.)
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