Business expenses

[boctie]

My friend and I have owned a small business for 20 years.
In the last few years I have taken 60% of the profits and she takes
40 due to the fact I do most of the work.
She feels that it is fair to leave the profit from one of our larger
parties at the end of the year in the account to pay the phone and
advertising expenses for the next year.
I say that means I am paying 60% of the bills. I suggested that we
each take our respected pay at the end of the year and put back
in equal amounts to cover the upcoming costs. Isn't this the
way to do it?

[radreality]

Why don't you take the percentage of revenue needed to cover expenses off the top of revenue you receive and put it in an account for when you need to pay those bills. Then do the 60/40 split after.

Do this once a week, once a month, or whenever you receive revenue; whatever works for you guys. Getting paid once a year is pretty rough.

______________________________
Robert Falk
Business Developer / Investor
RADReality.com

[Cole Taylor]

OR you could prepay the expenses, even if it's just an accounting entry, to cover expenses until whatever month it is you begin to generate enough revenue.

Sounds like you need to start taking salaries based on efforts.

[jasaunders]

Both good suggestions.
This is something you should have discussed prior to starting the business. You would be wise to get something in writing between you two as soon as possible.

[boctie]

We do take pay each month. We do casino parties for businesses
so we are busy from November through March and then we only
have an occasional party (maybe 4) through the rest of the year.

Since December is huge for us last year we took the profit from
one party and left it in the account to pay the phone and adv bills
for 12 months. So instead of me taking say $600 and her taking $400
from the party we left it in there thus I paid for 60% of the bills.

I would rather take that $1000, take our percentage and then each
put in an equal amount. Say $400 from me, $400 from her. That seems
fair to me. Is that wrong?

[radreality]

We do take pay each month. We do casino parties for businesses
so we are busy from November through March and then we only
have an occasional party (maybe 4) through the rest of the year.

Since December is huge for us last year we took the profit from
one party and left it in the account to pay the phone and adv bills
for 12 months. So instead of me taking say $600 and her taking $400
from the party we left it in there thus I paid for 60% of the bills.

I would rather take that $1000, take our percentage and then each
put in an equal amount. Say $400 from me, $400 from her. That seems
fair to me. Is that wrong?

You've gotten two good suggestions so far. Its your business. You're the one asking for advice, its your choice whether you adhere to it or not.

______________________________
Robert Falk
Business Developer / Investor
RADReality.com

[deep_impression777]

Id say pay the bills first then split the revenue after. Its less complicated and would get the bills taken care of first. In the long run, this will become a habit that will save you from disputes.