Yep potential partner is a strong manager and hardcore engineer. I'd be handling all of the corporate ops -- contracts, accounting, regulatory compliance, office, etc. It's a deal where we bill hourly, so pretty clear how to allocate revenue and costs between partners.
Is there any chance you'd bring on additional folks in the future who would also have billable hours but would be employees rather than partners? If so, deciding how would you allocate the company's share of their billable rate is where I could first see things getting sticky with this arrangement.
By having him on board, we could potentially grow more in his discipline area which is different than mine.
Is there a synergy to having the two of you together? Or in other words, if he is growing his billable hours in his discipline area which isn't yours does it provide any financial or career benefit to you?
I'm wondering if I offer to take 5% or 10% of his revenues for my efforts plus his share of costs, would that be a fair arrangement? I'm also considering 0%, but then it doesn't really seem worth the effort.
Depends on how much time you're sinking into all the corporate ops stuff. Also, what you and I agree is fair won't necessarily have any relationship to what you and he agree is fair (if you can agree at all). Do talk about this stuff.
The one solid piece of advice I can give here through is: don't get locked into a situation where you are doing support work for your partner for free.
You could take a percent off the top.
You could arrange a guaranteed fixed payment for corporate governance per month or per year.
You guys could both agree to put a fixed percentage of your billables back into the company account which can be used for farming out at much of the work as as possible with the understanding you'll be bringing on a part time operations manager as soon as you bring in at least $X/year.
I'm sure there are other possible arrangements.
People value things that they pay for. If doing the scut work of making an independent company actually function is provided for free, it won't be treated like it is valuable, and over time can lead to resentment and friction.