One partner does all the work. How should equity handle that?

Not by hoping it evens out.

This is the most common partner problem I see, and it's almost always created at the beginning by two people splitting things fifty-fifty because it felt fair on the day.

Why equal splits go wrong

Ownership is permanent. Contribution isn't. One partner puts in money and expects to step back.

The other puts in time and expects to run it. Two years later one is working sixty-hour weeks and the other is collecting half the profit.

Both feel wronged, and both are right by the arrangement they made.

Separate the two questions

• Who owns the company is about capital, risk, and long-term value.

• Who gets paid for working is about labor.

Conflating them creates the problem. A working partner can be compensated for the work — a salary, or a guaranteed payment — before profits are split. Then equal ownership stops meaning unequal reward.

Vesting

If someone is earning equity through effort rather than paying for it, vest it over time. Equity that vests over three or four years means someone who leaves in year one doesn't keep a quarter of the company.

Without vesting, a partner who stops showing up keeps everything they were granted on day one, and there's nothing you can do about it.

Build in the exit

What happens if one partner stops contributing? Without a mechanism, nothing happens. They keep their interest, keep receiving allocations, and you keep working.

A buyout right tied to defined circumstances is the answer, and it has to be agreed before anyone is unhappy.

What to do

If you're forming with a partner, separate ownership from compensation and vest anything being earned through work.

If you're already in an unequal arrangement, raise it now. It doesn't improve on its own.

This is general information, not legal advice for your situation. If you want an answer for your business, book a consultation.