Split the profits equally as although you are investing the funds your partner is going to run the show by managing the affairs of school
get partnership deed drafted by lawyer
Partnership business profit and loss sharing
Hi, I am investing 5lac for establishing an educational institution in my village with an Imam working in my village. He approached me with an options either I loan the whole investment amount or sharing the school profits and loss. How much percentage is normal on what basis? I will do the investment, he will do the execution that means he will look after all the management of the school. How do we share profits and loss for such scenarios? What are the terms and conditions we should consider for such partnership when one person is investing money build and establish and other partner is doing all the work related to execution of school?
Asked 7 months ago in Business Law
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6 Answers
If you both have decided to do it as a partnership business then you can reduce the terms of partnership to writing on the basis of mutually agreed conditions.
As you will be investing fully but will not participate in the business, whereas the other partner will take care of the entire business activities he will be considered as working partner and you as a sleeping partner.
In this situation you can decide about profit sharing either equally or on justified proportion.
Since you will be bearing the entire investment, you may have to bear the losses that may occur.
Terms of partnership agreement depends on mutual consent. No law prescribes such percentage.
Again the drafting the partnership agreement s a skilled job for which you need to contact a good advocate. While drafting such kind of agreement many future contingencies have to be kept in mind.
You need to draft a detailed agreement with him noting all the terms decided between you both
Dear client, there no normal rule or obligation to share the percentage of loss or profit. It must be dealt under the partnership agreement between the parties. In the partnership agreement the parties can decide what is the percentage should be shared.
Provide all the details, will prepare a precise profit sharing agreement with all pros and cons.
