How should I divide profits in an LLC?
How should I structure this new money coming in? Is it a capital investment? Should I give myself preferred stock? How about drafting loan papers to the corp?
Enter the Project Grow Challenge presented by Entrepreneur and Canon USA for a chance to win up to $25,000 in funding for your business. Deadline is Sept. 15 2015. Click here to enter.Run -- don't walk -- to the nearest business attorney who works with software start-ups. Your question shows that you are mixing up important legal entity concepts (you don't have stock in an LLC, and it's not the same as a corporation), and it's not clear why you have to pay for your partner's work and expenses.
These issues could come back to haunt you in the long run if you don't get professional advice. You'll want an experienced eye to look at your arrangement to see whether 51/49 is really fair if you're putting in the money (so it seems), and your partner is putting in only sweat equity. In addition, depending on the capital you put in, there may be tax advantages to treating some of the money as a capital contribution and some as a loan -- so your tax advisor should also be on board to guide you.