Convergence
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- Feb 5, 2023
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My business partner is leaving town. We've run a landscaping business for 3 years, grown the biz every year and we're in good shape for 2023.
My business partner has decided to leave town and we're now trying to figure out profit sharing going forward.
We both own our own truck, so that part isn't a concern. For equipment (we're not lawn care, so not a ton of heavy machinery) we're going to figure out splitting and paying out for remaining equipment.
His idea was to pay him a profit share of 10-15% every quarter going forward. I had considered a buyout initially (and still am) but decided against for now as the potential number given by my accountant was way higher than expected.
He's planning to start another landscape biz where he's moving to and I'll have the same profit share in it as he does in mine, which potentially reduces my payment to him over time if it works out. If his biz works, a buyout of our current business could be lowered based on his new company evaluation.
10% for this year seems reasonable on my end but I have no experience with this type of situation. I also am wondering if the profit share would be after my salary or would just be the net income of the business altogether.
Your thoughts on this situation welcome/needed!
My business partner has decided to leave town and we're now trying to figure out profit sharing going forward.
We both own our own truck, so that part isn't a concern. For equipment (we're not lawn care, so not a ton of heavy machinery) we're going to figure out splitting and paying out for remaining equipment.
His idea was to pay him a profit share of 10-15% every quarter going forward. I had considered a buyout initially (and still am) but decided against for now as the potential number given by my accountant was way higher than expected.
He's planning to start another landscape biz where he's moving to and I'll have the same profit share in it as he does in mine, which potentially reduces my payment to him over time if it works out. If his biz works, a buyout of our current business could be lowered based on his new company evaluation.
10% for this year seems reasonable on my end but I have no experience with this type of situation. I also am wondering if the profit share would be after my salary or would just be the net income of the business altogether.
Your thoughts on this situation welcome/needed!
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