WA Partnership Business Structure

[solutions197]

Commencing a new business and need advise on if there is a way to structure business so any 'active' hours for customers that are completed by each business partner, they are entitled to the share of 'active' hours they have completed, but also share the profits from subcontractors and any other business profits 50/50

 

[jackaustin]

Split it into two pools: active/billable hours revenue divided proportionally by hours each partner logs, and subcontractor profit plus other business income split 50/50 regardless of hours. To make it work: keep separate books for these two revenue streams, define "active hours" precisely in writing (what counts, how it's logged, dispute process). If client facing appointments are part of the mix, it also helps to build in a confirmation step to reduce no-shows, since unbilled time from missed appointments is one of the most common sources of dispute in hour based splits. Then write the formula into a partnership agreement or LLC operating agreement. Entity choice matters. LLC/partnership agreements handle this flexibly; a UK Ltd company usually needs salary/fees for the hours portion plus dividends for the 50/50 share, since dividends are normally pro rata to ownership. Get a lawyer to draft the actual formula with numeric examples, and an accountant early since tax treatment differs between "hours pay" and "profit share."