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[Sliver]

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[mykalberta]

Dont most companies like that take minimal salary and pay themselves through dividend payouts to limit tax exposure since you are taxed lower on dividend payouts than on income past 60K or whatever the number is?

It would also depend what you mean by comfortably profitable. If you are comfortable and getting 70K a year, I would say be happy. As the other partner (given the relationship) would likely say if you want more than they could simply hire someone for cheaper IMO.

Or try to workout a situation of you buying your partners share of the company gradually if he/she is willing to sell.

[SeeGeeWhy]

Ask yourself one question - how much would it cost to replace yourself in the role you're doing?

If there is market data available, use it. Companies like mercer, etc that conduct industry specific salary surveys are the best, but they cost money to see the data.

A good free website for wage info is here:
http://www.alis.gov.ab.ca/WAGEinfo/C...Page&Page=Home

It doesn't talk about total compensation though, which excludes benefits and other bonuses.

Generally speaking, it sounds to me that you guys are bickering about salary and how much you get out of the business which is a serious problem for the long term viability of the firm. Partner problems sink so many businesses.

If you want a bigger share, buy out some of your partner's equity instead of arguing the value of your day to day services. Which is more valuable in the long run?

[sixpacked]

As a previous poster suggested, if your business is a CCPC, dividends to shareholders get a preferential tax treatment. You may also need to take into consideration, how close to retirement you are, your costs of living, etc. Management fees and their calculation/payout should have been discussed/documented in a shareholder/partnership agreement to avoid future hassles.

[Sliver]

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[Sliver]

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[mykalberta]

I pick 70K because a friend of mine is in a similar situation with this parents owning 47 of the biz and he owns 53 and he takes a 70k salary. His parents provided the seed money and do no other work. They still have an equal voting share

He has a much sweeter deal than I am sure you have, where so long as the company has a certain profitability % then that can be used to pay back his parents and gain a larger % of the company.

They came up with that number (it started at 35k when the biz was starting) as the peak salary number his parents would be ok with. Anything more and they hire someone in addition to my buddy as his parents dont want him to get complacent in the job with a higher salary.

The biz is very profitable, last year both parties had a higher dividend payment than his yearly salary.

[Peanut]

It kind of seems like you're asking for advice but then shooting all the advice down that's coming back.

How can anyone tell you how much you should be making if there's no other info about the business or what kind of profits you're pulling in? What is comfortable profit to you might be completely different for someone else. I have a hard time imagining your particular business is so unique that you couldn't find some comparables to help you evaluate??

Given the information you've provided and your response to the "average" salary for the Retail Managers group being too low, why not just pay yourself what you and your partner are comfortable with? If $70,000 seems right, go for it. $50,000? $100,000? Sounds like you're in the driver's seat to me so just discuss it with your partner.

[Sliver]

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[Peanut]

I can appreciate why you aren't, for sure, but I guess what I'm saying is that it's hard to tell you how much I think you'd be worth if I don't know what you're doing or how much the business is making.

How about this. Ask for $1,000,000 and just take it from there.

[Sliver]

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[SeeGeeWhy]

Perhaps a phone call to someone like KPMG would be worthwhile to see if they have any data that would be more comparable to someone if your situation.

You're in the salaried position for now, but you're not always going to be there. If you have any inclination to transition the business to another owner, setting your salary properly is an important thing to do. We frequently use impared or inflated salaries as an adjustment to business valuations.