Opinion, September 2003, www.aljazeerah.info
Business Partners or Employees
Adil Salahi, Arab News, 9/15/03
Q. I entered into a business partnership with a friend, agreeing initially to share any profit or loss equally. However, due to several difficulties and time-consuming details, which I attend to, he agreed to let me have an additional fixed sum of money every month as profit. Is this arrangement acceptable?
A. I suspect that yours is a sleeping partner, providing capital but not contributing to the work involved in the business, while you are looking after the business and providing no capital. In this case, you should agree on the sharing of profits. You could easily agree that 40 percent goes to the capital and the rest to the effort, which you are putting in. The arrangement can be flexible so as to meet the needs of both parties.
On the other hand, if both of you are sharing both capital and effort, then you do not have any justification for one partner taking more than the other. What you could do, however, is to agree to a definition of the work involved. For example, you may decide that one partner will attend to procurement and the other to marketing, and both of you attend shop and serve your customers. This gives you equal shares of profit and loss. In addition you may be asked to do the bookkeeping, serving extra hours, or doing it at home in the evening or early morning. In this case, you may agree on a salary for this extra service. But it should not be a percentage of profits.
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