Suggestions on sharing the pie?

Say there’s a company with one sleeping partner and two other partners who work in the company. Say they have each put an equal amount of money into it. What would be a reasonable share for each person?

Should the working partners have a bigger share of the profit: say two fifths each? Or should they be paid a salary plus one third of the profit?

I realise that there are probably many ways to do this, but I have no experience of this kind of stuff and would like to get some idea of how things are normally done.

Thanks for any tips.

Good grief! You’re asking us to comment on a bet before it’s been dealt?

OK: Working partners should get more, depending on performance. Sleeper should get more if they invest more, and if they are the main supply of liquid capital.

Thanks for the reply.

[quote=“TheGingerMan”]OK: Working partners should get more, depending on performance. Sleeper should get more if they invest more, and if they are the main supply of liquid capital.[/quote]As I said, let’s assume an equal amount of investment from each of three partners.

How would one go about measuring performance? It seems to me that trying to negotiate profit shares after money has been made could stir up a lot of trouble. This is why I thought it would be better to have these things agreed upon and put into a contract in the beginning.

I might be wrong about this. As I said, I have little experience in business and so would appreciate specific suggestions. In particular, I’d like to know what is commonly done on the issue of salary v.s. larger profit share.

If equal invested, the sleeping partner should only participate in the profit, not getting a salary.

Normally, as said before, the sleeping partner mostly put more or all of the money in. He gets the largest slice of the profit. Only if it’s a special business idea brought up by the active partner shares could be 49/50 or 50/50 + 1 share and the active partner be paid a salary. The sleeping partner gets the most shares if agreed to but never a salary, sometimes tho he is paid some dividend, aside the profit.

Whilst the other comments are helpful I’m sure, as it has been pointed out, a sleeping partner usually invests most of the capital and its due to lack of capital that the other partners accept such a situation.

Its seems strange to me that you would in fact want a sleeping partner if you and your other working partner can put forth 2/3 of the capital. If I were you, I would do whatever possible to remove this partner…

Any particular reason why he/she exists?

also, profit can be re-invested, that’s why dividnds are paid out … sometimes all depends on the tax situation … what’s the best deal for each investor …

If you have a sleeping partner and 1-2 active partners, the easiest way of getting the spoils sorted is to pay a salary to the active partners, and dividends to them all on an equal basis. Thus you reward the active partners for the work they put into the firm, but also make sure that the passive partner does not get a raw deal.

(The dividends can for tax reasons be paid as salary)

Our situation isn’t so different.

Three partners own the business.
Currently:
all are active parties:
so salary plus bonuses plus proportional dividends

One of our ‘active’ parties is intending to be inactive, so for her, the remuneration would most likely become

proportional dividends, unexpected profts(?).

Plus the thrill of ownership. If the business is sold, she cashes out. Hence one principal reason for ownership.

Kenneth

Thanks to everybody for the helpful comments.

Things are now tending towards the sleeping partner putting in a larger share of the capital. This seems to be a more standard arrangement.