Hi,
thanks in advance for hep me out.. I believe this is one of the best place to get answers to by question... To begin with let me clarify I have no accountancy/finance background.. I am a IT guy who is venturing into starting a small business in partnership... there is no taxation involved.. my scenario/question is as follows (considering no taxation involved)
If two guys starts a business in a 50:50 partnership. They both contribute for example 1 Million dollars in Jan 2014. Now from this 1 Million dollars they will buy assets like PC ,furniture, pay salaries etc also during the course of the year they will take on projects so those projects will have their relevant expenses as well as income from them.. now my question is as follows... considering the 50:50 partnership... at the end of the year how and what do they take away as profit from the business/their dividend
Example:
initial investment 1 MM
expenses (Assets) 200K
other expenses 400K
remaining funds:
400K
income from projects:800K
now should they return 600K from the income/profit back to tthe capital like 600K or only 400K operating expenses and then divide the rest among themselves 50:50 or this is totally separate thing.. this is where I am not clear...
and scenario 2 what happens when the income is zero or less that the expenses?
you expert opinion in lay-mans terminology is extremely appreciated.
thanks in advance for hep me out.. I believe this is one of the best place to get answers to by question... To begin with let me clarify I have no accountancy/finance background.. I am a IT guy who is venturing into starting a small business in partnership... there is no taxation involved.. my scenario/question is as follows (considering no taxation involved)
If two guys starts a business in a 50:50 partnership. They both contribute for example 1 Million dollars in Jan 2014. Now from this 1 Million dollars they will buy assets like PC ,furniture, pay salaries etc also during the course of the year they will take on projects so those projects will have their relevant expenses as well as income from them.. now my question is as follows... considering the 50:50 partnership... at the end of the year how and what do they take away as profit from the business/their dividend
Example:
initial investment 1 MM
expenses (Assets) 200K
other expenses 400K
remaining funds:
400K
income from projects:800K
now should they return 600K from the income/profit back to tthe capital like 600K or only 400K operating expenses and then divide the rest among themselves 50:50 or this is totally separate thing.. this is where I am not clear...
and scenario 2 what happens when the income is zero or less that the expenses?
you expert opinion in lay-mans terminology is extremely appreciated.
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