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Expense Management: How should we divide up expense account amounts between partners?
JC
JC
JD Carluccio, Entrepreneur,, Head of Product, Consultant answered:

I'm going to answer you with my own experience. The way you mentioned to divide the expenses makes total sense and it's consider the "rational" thing to do. I have seen it work many times and it's what many would consider "fair".
The problem (and this is counterintuitive) is that we are humans with emotions and we can't separate us from them.
Once someone starts buying nicer things the "ego" hits in, also the "jealousy" and the competitive nature. This brings bad culture and a worst environment. I know you think "we are different", "it won't happen to us" but it actually does and it's not your fault, it's just our nature.

My solution is the following. Treat the company as a separate entity from the three of you. So the company (not you) have revenue and costs. THE company can have expenses and they should be as little as possible to run efficient and lean. THE company has to create the most profits as long as it's in the same direction of creating value for their clients.

Now, because the company has shareholders (you guys/gals) the profits it generates will go into your pockets 50/30/20. This is after your salaries, that depends on your place in the company and that is money totally entitled to each of you. The profits can be expended as whatever you want because it's like part of your salaries.
You will think this makes no sense due that is just a "technical" step. But it's important to separate you from your company. Keep personal and professional in each side of the table.

Hope this helped :) If you want to reach out I would be happy to talk. I have helped many family companies to also deal with this kind of issues.
Have a great day

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