No profit ?

[Arhenius]

Florida

Hi !

I was working for a guy in his jet ski rental business. We agreed I'll get 30% of the profit as salary, but since he took $40k loan to start his business, we agreed we will not take out any money until he paid back the loan. I was his employee, not his partner. We never signed any contract about this, we had a verbal contract, and he admitted to many people we had this agreement.

We started last year, May 15th, closed August 31st, both of us worked 7 days a week 10-11 hours a day with no break, no days off. We took out maybe $3500 as salary, because he still had a huge debt.
This year we started around May 20th, and I did quit 5th of July. At that day we paid back $15k as loan, bought a new jet ski for $8000, various things, tools, signs for the business for $2000, $11k as salary for the 2 of us, and had $24k on the business account ( total $60000). I asked him to pay my share, my 30% of the profit, but he said there was no profit, because his business still in $3000 debt. Is he right ? I believe he owes me 30% of this $60000 minus that $5500 he paid me already... Can I sue him and win to get my money ?What is the name of your state (only U.S. law)?

[Antigone*]

Florida

Hi !

I was working for a guy in his jet ski rental business. We agreed I'll get 30% of the profit as salary, but since he took $40k loan to start his business, we agreed we will not take out any money until he paid back the loan. I was his employee, not his partner. We never signed any contract about this, we had a verbal contract, and he admitted to many people we had this agreement.

We started last year, May 15th, closed August 31st, both of us worked 7 days a week 10-11 hours a day with no break, no days off. We took out maybe $3500 as salary, because he still had a huge debt.
This year we started around May 20th, and I did quit 5th of July. At that day we paid back $15k as loan, bought a new jet ski for $8000, various things, tools, signs for the business for $2000, $11k as salary for the 2 of us, and had $24k on the business account ( total $60000). I asked him to pay my share, my 30% of the profit, but he said there was no profit, because his business still in $3000 debt. Is he right ? I believe he owes me 30% of this $60000 minus that $5500 he paid me already... Can I sue him and win to get my money ?What is the name of your state (only U.S. law)?

It sounds to me like the venture had earnings ~ that is totally different from profit. Profit is what is left over after all obligations have been satisfied. You need to look at the balance sheet and income statement to see how items were journalized, how the revenue was tracked and how the expenses were taken.

Again if we are talking profit, you are certainly not entitled to 30% of 60k.

[Andy0192]

Revenue does not equal profit.

[Arhenius]

Sorry, I wasn't clear.

The $60k wasn't the gross income. We made about $85-90k since we started. Of course I did not count the other expenses, as gas, rent, insurance, etc., I know we had to pay for that. What I mean, he got 70% of the profit because he provided the jet skis, and paid the expenses, but he had no money left to pay salary to anyone. That's why I said I'll do it for 30% of the profit what we'll make with the jet skis, not what his business will make. I did not take my money out so I could help him pay the jet skis off faster.
Now he says we did not make any profit because he still has debt. I do believe we paid the loans back out of the profit. I mean he had nothing when he started, now he has 4 jet skis paid almost full... isn't it a profit ? He had $-40k at the beginning, now he has only -3K plus one more jet ski what we bought for $8K... this is not profit ? Do I have to work for free until he get out of his debt ( I have no share in his business, hes the 100% owner ) and maybe get some money after ? What if he decides he'll buy more jet skis and sell the old ones... we still won't make any profit but he'll get money out of the old jet skis because it's on his name or his business property ?

[Andy0192]

If you wanted to be a 30% partner in the business, you could have a share of his equity that he's been building up. However, equity still does not equal profit.

You failed to clearly define your expectations with his business and your participation. Profits are difficult to come by, successful corporations are often happy to have a net profit around 5-6% of revenues.

Payroll taxes, insurance, advertising, it all adds up.

Next time, get your agreement in writing.