Growth Strategies

How should I divide profits in an LLC?

min read
Opinions expressed by Entrepreneur contributors are their own.
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.

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