My business partner and I are working together developing websites. We are starting to make some money from AdSense which we are splitting 40% each with 20% going to a shared paypal account for future investments (purchasing websites). The entire partnership is based on trust. My question to you is; what is the best way to create security in the partnership? For example: if the domain name, and its traffic is registered to one partner, wouldn't he be able to sell it and keep all of the profit? How would I protect against this situation? The partnership has been working well so far and we have been splitting the money fairly. Note that both of us are under 18 years old and we live in different states. Thanks.
Rather than splitting AdSens money after the fact, meaning it first comes in somewhere in someone's bank account (risk), implement an ad rotation policy (simple script or something like phpAdsNew) that provides the 4:4:2 ratio automatically and dumps the clicks/money in your individual accounts. That way no one controls the money. The website could still be sold by the person it's registered to but once you buy more webistes, just make sure you split the portfolio as well. If things start getting big, start a company and have proper contracts instead.
danbradster, The best way to do this is sign an operating agreement. Under the conditions, you can: spell out who does what, divide assets, assign responsibilities, lay down guidelines, and plan for the future of your partnership. I would suggest that you figure out how much money each individual has put up to pay for domain registration, advertising, hosting, etc...Then, I would make sure that you each get paid out according to what you contributed. Next, move all the assets under a business structure which will provide security, legal protection, and asset handling. I am not sure about incorporating if you are under 18, so you may want to do some research on that. I am sure that your business partner would agree that this would benefit both of you. You should be concerned about security in the partnership...I am sure your partner does as well. Continue the hard work, and don't let anyone ever make you feel bad for protecting your assets.
Thanks both of you for the guidance. I'm not overly worried about 1 months adsense money, just the domain and traffic. At the moment we have 3 websites with only 1 making any decent money. So you think we should build up quite a few websites and register 50/50 in each name for security. Thanks again.
Or have them in person A's name but on person B's e-mail address so one person can not authorise a domain transfer without actually committing the crime of identity fraud.
I'd say energydude gave the best "advice". I've seen these disputes happen, and they can get quite ugly. The sooner you spell out what both of you can and can't do, the better. It's not going to prevent the worst possible scenario, but at least you can cover your bases should it come to that point. (knock on wood...)
Agree totally. Trust is never an issue... until someone's needs change. At that time, people can justify pretty much anything... thus the candid discussions, terms, and resolutions MUST be sorted when the relationship is at its best... foresight is far better than hindsight.
It sounds like you have a decent relationship going on right now, but that is all subject to change especially as you grow your business. Instead of wrestling over things, talk with your parents as your age will have plenty to do with how things are handled legally. In addition, living in different states can be an issue as to how you formalize your business structure.
You can change the whois info's email (which is required for transfer) into a public one (only between you two). Also do a script that read the whois of your website on a daily basis and checks that the email exist, each get a copy to their person email when not. Just an idea. Another idea, marry his sister and make sure she is on your side (oh forgot, you are under 18) Peace,
That's all fine and good, unless AGE becomes an issue. I don't know what your local/federal laws state, but working within what would otherwise be legally binding framework, may be complicated due to your age. Especially if you consider what COULD happen if your business becomes successful, and a dispute erupts that puts adults and/or legal guardians in the center of the controversy. If you are not considered an "adult" in your area, don't overlook this bit of advice. Good luck, though. Nice to see you making a go of it!
You may do well to read this thread, whilst not exactly the same scenario it will show you what can go wrong! IMHO - you cannot run a successful business partnership on trust because at some point down the line, someone will get the hump with someone else, think their doing more so deserve more, see their own ideas work better, or any number of things and that is the point when the trust goes out the window. Formalise any dealings, even if its just a matter of you both writting your revenue sharing, cost sharing and domain sharing on a bit of paper and signing it, this could be the one thing that just makes a party think twice about what they are maybe going to do.