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I am about to start a restaurant with my partner, and he will run the day-to-day operations.

I am about to start a restaurant with my partner, and he will run the day-to-day operations. I will be responsible for the accounting. How should our salaries be determined? Industry average for both? Or should I sacrifice my pay until we're profitable since he is running the restaurant?
Nina Kaufman answered June 13, 2008
URL: http://www.entrepreneur.com/answer/221446
This is a very thorny situation. If you're independently wealthy and this business is more of a fun hobby for you, whereas it’s your partner's livelihood and sole means of supporting his family, I might see where a disparity wouldn't necessarily create a problem. 

However, if each of you is a 50 percent owner of the business, your salaries should be equal, unless you have a very clear understanding that the time investment each of you make is so disparate as to warrant a different salary. The reasoning is, if both of you are involved in the business full-time but you have different salary structures (especially if you forego a salary altogether), you could easily create a situation that breeds resentment.

Both roles--the outside face of the business and the back office functions--are necessary for the company to run smoothly. Look at the industry standard for determining the amount, but also see realistically what your business can bear. If it can't afford both of you at market rate, then both should take less.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.