[throwfrustrated]

Well that "equity split" was when I decided to go part time, at that point, we effectively had done the same work (almost nothing).

And no, I don't get any salary as a full time employee, all profits are divided, so we effectively get the same amount of money every month.

[gyardley]

Your business is doing well enough that it should be set up properly - proper legal structure, proper accounting, etc.

When you do this, your accountant (at least in America) will happily tell you that to be 100% kosher, full-time employees should get paid full-time salaries at market rates, whether they're owners of the company or not. Both the IRS and individual states take a dim view of small-business owners dodging 15% or so in payroll taxes by paying themselves solely via corporate distributions.

You can and should also pay yourself out of corporate distributions, of course, but to be legal your salary should come off the top first, and only then should you be splitting profits 50-50 with your cofounder. If your cofounder also wants a market salary, well, he'll just have to come work on your business full-time with you.

[throwfrustrated]

As far as I (and our accountant) understand, the structure we have is not a problem at all from a legal point of view (We're not from the U.S.), so no worries there.

[bdfh42]

Amen, In the UK the "Revenue" take a pretty dim view of those who only pay themselves dividends.

Take a proper salary and see how that changes things.