How to split profit between business partners

1. Start with the real net profit

Profit is what is left after all of the period's expenses are paid:

Net profit = total revenue − total expenses

Before you split anything, make sure that every sale and every cost of the period is recorded, including costs that one partner paid personally. Missing expenses make profit look bigger than it is, and the partner who paid ends up subsidising the others.

2. Choose a split method

These are the methods small partnerships use most often:

• By capital contributed. If partner A put in 50% of the money, A gets 50% of the profit. Simple, and it matches what each person risked.
• By agreed fixed percentages. Partners agree on percentages that reflect money, effort, skills, or an asset such as land or a shop. This is common when one partner brings the location and another the work.
• Salary first, then split. Partners who work in the business are paid a monthly salary as an expense. The remaining profit is split by ownership. This keeps things fair when some partners work full-time and others only invest.

Whichever method you choose, write it down. Our guide to partnership agreement basics explains what to include.

3. A worked example

Three friends own a café. Ahmed put in 50% of the capital and runs the café full-time. Sara put in 30% and Omar 20%; neither works there. They agreed that Ahmed is paid EGP 6,000 a month as a salary, and the rest is split by capital.

4. Decide what stays in the business

Not all profit has to be paid out. Many partnerships keep a fixed part, such as 10% or 20%, for repairs, stock, or slow months. Agree on this before the split, and record it clearly so everyone knows the money is still the partnership's.

5. Agree how losses are shared

Some months will lose money. Decide in advance whether losses are shared by the same percentages as profit, and whether a loss is carried into the next month or covered by new contributions.

6. Account for money already taken

If a partner took money from the till during the month, subtract it from their share at the end. Keep a simple note of these withdrawals so nobody has to rely on memory.

Doing this in Sharaketna

1. Add each partner as an Owner and set their profit-share percentage.
2. Create an expense category such as "Partner salaries" for working partners.
3. Record the month's revenue and expenses in one sheet, with receipts attached.
4. Send the sheet for review. When everyone agrees, mark it completed.
5. Open the owner profit-share report to see each partner's share.

This guide is general information, not legal, tax, or financial advice.