Rather than go into business by yourself, you may choose to form partnerships with others in order to share the burden and make use of everyone's talents. If you're entering into a partnership—either established or new—one of the biggest decisions you'll have to make is how to divide interest, risks, and responsibilities. Here are a few ways to make sure everyone is compensated fairly.

Make an Accurate Percentage

Most partnerships distribute funds from the business based on a percentage. Deciding on this percentage can be a tricky job, though. While many people consider their new partnership to be "50-50," the effort and money put into the business is rarely exactly equal. So, before deciding on a percentage of interests, honestly discuss who will take on which tasks in the business—such as accounting, marketing, administrative work, and manufacturing—so no one ends up with all the work. 

Also, make a plan to revisit the partnership agreement once every year or two to discuss whether it still reflects the business as it's really run. Some partners may find that their effort contribution has changed, that they have taken on (or will take on) different tasks, or that their desire to actively participate has changed. All these situations could call for a revision of the agreement to keep things equitable. 

Take a Salary

Another way to equalize ongoing payments to the actual contribution of each partner is to pay a salary in addition to regular distributions of interest. A salary could be negotiated between partners to compensate one or more of them for doing specific, additional work over and above the other's time investment. For example, if one partner agreed to take on the marketing tasks—which require extra time during the early days—they could take out a small salary that reflects this added work. 

Salary amounts are much easier to adjust and manage than changing the percentages formally agreed to in the partnership agreement. 

Create a Schedule

If you have limited partners, make sure you create a distribution schedule for their interests. Generally, silent partners receive a distribution quarterly or annually. All the partners should understand the distribution schedule so you can plan for it in the business' finances. This will also ensure that there isn't any confusion or resentment between partners. 

Operating a partnership is complex, particularly when the business is in operation in a real environment. To learn more about how to set up the business so everyone is properly compensated, work with an experienced certified public accountant, such as Vlasac John M & Co, as early as possible. 

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