Website Hosting Biz- Questions on salary suggestions!

[ctrujillo45]

Hello there,

My partner and I currently have website development and hosting company which we have been operating for the last 6 years.We both work full time jobs, therefore we have established the business so we can work on it after our day job. Currently we have about 80 active clients hosting and we develop on average, at least 1 -2 sites per month. We have made investments on all of our hosting equipment and have fully paid it off.

This year, we decided to form an LLC to protect all of our assets, as we have both recently purchased real estate.

One question I have is we are clueless on how to figure out how to pay each other for work completed. First, there are the hosting fees which income is generated. Second, as stated before we develop 1-2 sites per month on average. At times, there are months where we do not develop any sites.

Can anyone suggest a fair way to pay a salary for an LLC partnership? Would you suggest paying a small monthly salary, in looking at debt/ expenses? We are going to be sure to put money back into the business for marketing, and unforeseen expenses, and also for taxes. We just dont know a fair way to pay ourselves.

Any thoughts?

[mbrand2222]

Unless I'm misunderstanding, would it not be fair to take the total monthly profit, set aside a per-determined percentage for advertising, pay the bills, and then take the rest and split it in half? Or maybe you aren't working relatively equal hours. Maybe I'm missing something, because that seems too simple.

[ctrujillo45]

Hi Mary,

Thanks for the response. It may seem quite simplistic but the problem we are having is we both do not work equal hours. Once we get a project, one of us will generally handle the project until completion. In my case, I handle most of the web/ graphic design while my partner works on the hosting and server administration. In the past, I would take a 80% of the fees charged for website development, leaving little the additional 20% for the business, since I completed all work. Now that we have the LLC we are trying to structure the business differently. My partner spends many hours working on server administration, therefore we are trying to find a fare way to split the money. This is where the unequal hours come into play.

I am sure we are not the first partnership with this problem. That is why I look to people such as yourself for advice.

Thanks.

Carlos-

[Aletheides]

You're going to have to negotiate with your partner on this one, but this idea might help.

I would just take the average hours you guys have worked each month (if you have records of this, average it out spanning at least 12 months). Decide each others fair hourly pay and multiply it by average hours worked per month.

This way, if your partner is putting in 10 hours a month and you're putting in 40 or 50, you both will getting compensated fairly.

If you want to make it a lot easier just hire employees to handle what work you're doing now and then just split the profits after expenses.