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aference1
02-24-2010, 02:52 PM
Hello, I am a partner in a landscape business. We are 50/50. And we both work fulltime for our business. I was just wondering how should we pay ourself? What sould the percentage be that we split? We want to set an hourly wage and then add the percent that we make as owners. Any help will be great.

lklandscaping
02-24-2010, 06:22 PM
I'd base it on who paid the majority of the start-up costs, who the business is registered to (if 1 person), and base it on the investment that you put into the company.

How many accounts do you currently have?

FloridaBoy
02-24-2010, 09:53 PM
Have been there, done that. Wow what a mistake. After all was said and done, i ended up with all the financing in my name, because he was not honest disclosing his credit worthiness.

All profits, besides operating expenses where split 50/50. Why i did that is beyond me. I could have run it all my self with some more employees than we had, added a secretary, and still made way more money.

Best leesons are the ones that fail.

That was just my situation, not saying yours wont work, just think it through from all angles.

Good luck

picframer
02-24-2010, 09:57 PM
Hello, I am a partner in a landscape business. We are 50/50. And we both work fulltime for our business. I was just wondering how should we pay ourself? What sould the percentage be that we split? We want to set an hourly wage and then add the percent that we make as owners. Any help will be great.

Just my opinion but if you are paying yourself a salary and the two of you own the business, then why not reinvest the profits to grow the business? If you want to pay each other a % bonus at the end of the year from retained earnings, I would suggest at least 60 to 70% stay in the company.

Steve
02-25-2010, 10:30 AM
Hello, I am a partner in a landscape business. We are 50/50. And we both work fulltime for our business. I was just wondering how should we pay ourself? What sould the percentage be that we split? We want to set an hourly wage and then add the percent that we make as owners. Any help will be great.

Can you tell us a little how you came about to the 50-50 split? Do you both put the same amount of time into the business? Did you both put the same start up capital in it?

picframer
02-25-2010, 10:44 AM
Can you tell us a little how you came about to the 50-50 split? Do you both put the same amount of time into the business? Did you both put the same start up capital in it?

In my case I put 90% of the capital in, my son who is in University wanted to put in 10% as is ROE is close to 40% which you would never get having the money in the bank.

For last year we decided to capitalize income and simply pay off a few things and keep working capital for the spring which is a lot for us as we buy our sprays in 45 gallon drums, two weeks after we start it doesn't really matter but we save a lot buying such large amounts.

We agreed for this year, 60% of retained earnings would pay off debt, the company should be debt free by September, the remaining 40% would be paid to shareholders based on their percentage of ownership.

When you capitalize earnings then the value of your investment goes up, i.e. share value, when you pay it out we do it as a dividend and not income as the tax is a fraction, you have to either have a Limited Liability company or an Incorporated company to do this legally.

lklandscaping
02-25-2010, 01:40 PM
Just my opinion but if you are paying yourself a salary and the two of you own the business, then why not reinvest the profits to grow the business? If you want to pay each other a % bonus at the end of the year from retained earnings, I would suggest at least 60 to 70% stay in the company.

Couldn't agree more

aference1
02-25-2010, 03:38 PM
Can you tell us a little how you came about to the 50-50 split? Do you both put the same amount of time into the business? Did you both put the same start up capital in it?

We both put in the same amount. All equiptment purchased we split 50/50 so we both have spent the same amount of money. We did not have to get a loan for anything. I myself do all the bookeeping and billing and my partner does all the design work so we both put in about the same amount of work plus we both work on the same jobs together. say we charge 30 dollars an hour for mowing and we both work just mowing 40 hours that week, what should our percentage be that we split. The 30 an hour is just a example, not our real charge. All last year we did not pay ourselfs we just bought more equipt. But now the time has come where we need to get paid.

lklandscaping
02-25-2010, 04:07 PM
We both put in the same amount. All equiptment purchased we split 50/50 so we both have spent the same amount of money. We did not have to get a loan for anything. I myself do all the bookeeping and billing and my partner does all the design work so we both put in about the same amount of work plus we both work on the same jobs together. say we charge 30 dollars an hour for mowing and we both work just mowing 40 hours that week, what should our percentage be that we split. The 30 an hour is just a example, not our real charge. All last year we did not pay ourselfs we just bought more equipt. But now the time has come where we need to get paid.

Depends upon the type of job...

That is something that it's best if you decide..

Steve
02-26-2010, 11:37 AM
Well with everything you said, I would think it would be easy enough to just split the salary 50-50.

What's your view on that?

Have been there, done that. Wow what a mistake. After all was said and done, i ended up with all the financing in my name, because he was not honest disclosing his credit worthiness.

All profits, besides operating expenses where split 50/50. Why i did that is beyond me. I could have run it all my self with some more employees than we had, added a secretary, and still made way more money.

It would be interesting to hear how this situation imploded so others could look for similar warning signs and possibly get out of the partnership before it became a disaster.

aference1
02-27-2010, 02:08 AM
Well with everything you said, I would think it would be easy enough to just split the salary 50-50.

What's your view on that?



It would be interesting to hear how this situation imploded so others could look for similar warning signs and possibly get out of the partnership before it became a disaster.

My partner is a family member that is very wealthy. I dont think we will ever have any problems. But I would never go into a partnership business unless I knew the person for a very long time. Partnership agreement is very important so if any problems do occur then you can back yourself up. Is putting 70% back into the company sound normal? I figure we would pay ourself a hourly wage and then split 30% on top of that.

Steve
02-27-2010, 01:54 PM
Is putting 70% back into the company sound normal? I figure we would pay ourself a hourly wage and then split 30% on top of that.

Do what works for you. When you are first getting started, there is quite a bit of money that needs to be spent to buy all the commercial equipment you need.

Does 70% seem high? Yes but then again I don't know what you plans are. Some people will re-invest 100% back into their business the first year or so. I am sure some even invest more and don't start making a profit until quite some time later. But do what is best for you.

aference1
03-01-2010, 10:21 AM
Do what works for you. When you are first getting started, there is quite a bit of money that needs to be spent to buy all the commercial equipment you need.

Does 70% seem high? Yes but then again I don't know what you plans are. Some people will re-invest 100% back into their business the first year or so. I am sure some even invest more and don't start making a profit until quite some time later. But do what is best for you.


If we put 100% or more into the company how would we survive and pay our personal bills?

Steve
03-01-2010, 11:53 AM
If we put 100% or more into the company how would we survive and pay our personal bills?

Well from what we have seen on here, there are those who have money saved up or alternative income sources and can just dump everything back in and are not looking to make a profit in their first year.

But that is more the exception to the rule.