Partnership - Hours Worked

3 1/2 years ago, I entered into a partnership with another individual. We develop software - He does sales and I do programming. We had no formal agreements at the beginning.

As time has gone by, I have been unable to put full work days into the business, as I have other personal responsibilities which make it impossible for me to do so. But on the other side, my partner puts in 8-10 hours a day on the business.

Lately, he came out with his frustrations, in that he feels that since he works more hours, he should get a higher percentage of the business income, even though, my work is vital to the functioning of the business, as is his work.

What is the general rule on this, if any? Should I agree to take a smaller percentage? Should I demand an equal share?

Thanks!


Richard Wakeman
[email protected]

There is no general rule. Partners must place a value on their contributions and then come to an agreement on compensation. When partners do agree that their respective contributions are worth about the same per hour rate, then they assign a dollar value to that and allow compensation for hours worked to be taken out of profits and given to each partner, then the rest is split evenly. Therefore, when the work is valued at about the same rate, the partner who puts in the most hours gets the most compensation.

partnership - hours worked

As loku said, there is no general rule, primarily because you did not draft a pre-partnership agreement contract. Many partnerships have been destroyed because of failure to do this.
Arrangements concerning compensation are soley based on agreements made by all partners. Some contributions to a partnership may be far more valuable than others, therefore constituting a higher wage for less time worked.