Any decision you make on these choices is acceptable and normal. Here's some considerations:
- If you want your partner to put up money, then just establish that up-front. Otherwise I feel it's too complicated to track all that and it could get messy. For example, what if you want to spend $2k/mo but he doesn't want to kick in money for it. Do you "win?" But what if he doesn't have the cash? Just a bad situation.
- You can go either way on the profits. Since you'll have 75% share, you could still do straight profit-sharing and get paid back almost as quickly as if you kept 100% for yourself, but you're also rewarding your partner for working for free. Really this is a question that relates to the amount you want to share. For example, 25% but profit-sharing only once you're paid back (a point in time dependant not just on revenue but time to get revenue since you'll continue to put in money until you're cash-flow positive) might be renegotiated to a 20% share but profit-sharing is immediate. Either one sounds reasonable to me.
Another way to deal with #2 is for the money you give the company to actually be a personal loan to the company. That way "paying yourself back" is replaying a loan (i.e. a balance sheet transation not a P&L transaction), and cash-basis profits simply won't happen if you don't want because you can use extra cash to pay down that personal loan.
This is advantageous in your case for several reasons:
- Easy accounting for "how much money you've put in" versus amount taken back.
- You can set up simple profit-sharing (easy accounting, agreement) while still implementing "not until I get paid back" as in #2.
- You can play it by ear how much you want to share. For example, maybe it's 6 months in and you haven't been paid back completely, but a big order comes in and you want to reward you partner a bit, so you elect to do a distribution and share with him. This flexibility sounds better than "all or nothing" as you propose.
- If there's a corporate structure change (raise money, sell company, get another loan, ...) already having a loan in place makes the rest much simpler.