What is a partner’s right to compensation in a small business?

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What is a partner’s right to compensation in a small business?

I am 60%owner of my business I work everyday putting in 14 hours days completely running the ship. My business partner is 40% owner and does absolutely nothing; she doesn’t even come in yet demands to have a salary. In the beginning before we had many employees and needed equipment, she did get a salary because sometimes she worked. Should the company just pay her for nothing, even though it will be a hardship to the company?

Asked on October 5, 2012 under Business Law, Illinois

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Do you have a partnership agreement? If so, its terms will control issues of compensation and the like. If not, then you both will need to come to some sort of amicable soluton here. If you can't on your own, then you may have to get attorneys involved to help sort out the situation. Another thought is that possibly you could enlist the services of a professional mediator. If not, I'm afraid that the situation could go from bad to worse, with costly litigation. 


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