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In a business partnership, you can split the profits any way you want, under one conditionall business partners must be in agreement about profit-sharing. You can choose to split the profits equally, or each partner can receive a different base salary and then the partners will split any remaining profits.
sharing agreement generally expresses the ratio you'll use to distribute profits as well as how you'll divide any losses. Ratios may be determined by the amount of investment each partner put into the business or you may have an agreement that only divides profits, leaving you to take the hit for losses.
If you want your profit-sharing agreement to be rock solid, here are a few clauses that you must include in it.Profit Sharing. Clearly mention the ratio/percentage in which you will be dividing the profits.Termination.Dispute Resolution.Confidentiality.Obligations.Intellectual Property.Indemnities and Liabilities.
In the absence of an agreement the share of each partner in the profits and losses shall be in proportion to what he may have contributed. The partner who contributes his services only shall receive a share equal to the one who has contributed the least.
It is highly recommended to put a profit share agreement in place to avoid a dispute with the other party over the distribution of profits....The agreement should outline the:division of profits;confidentiality;intellectual property;roles and responsibilities; and.what happens in the event of a dispute.