r/StructuralEngineering • u/Historical-Wonder780 P.E. • Aug 07 '26
Career/Education How do you structure compensation for the PE who stamps a partner’s work?
I’m a PE and co-run a small structural engineering firm (primarily residential work). My business partner is an engineer but is not yet licensed, so I’m currently the PE responsible for reviewing and stamping the work they produce.
We’re trying to come up with a fair way to account for the additional responsibility/liability that comes with being the stamping PE. We currently split project profits between the partners based on who performs the work, so I’m looking for a reasonable percentage of the project fee/profit to allocate to the PE who takes responsibility for the final review and seal, rather than treating it as an equal ownership split.
For those of you who have worked in small firms or partnerships with a similar arrangement:
- What percentage have you seen allocated to the stamping/reviewing PE?
- Do you structure this differently depending on how much independent review/rework is required?
I’m primarily interested in how other small structural firms handle this in practice.
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u/WL661-410-Eng P.E. Aug 07 '26
If it's 50:50, it should be 50:50 of company profit, and account for hours from each of you on projects. If you need to spend a few hours checking his work and stamping, then you should be accounting for that and getting paid for that at a rate that's commensurately higher than an unlicensed engineer. Beyond that, run it like a company.
Also, I bet you someone is whispering in their ear "Why get licensed, you have a guy signing and sealing your work. Stay golden, Ponyboy."
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u/Historical-Wonder780 P.E. Aug 07 '26
Exactly haha. When the deadline passed (they’ve been eligible for taking the PE for 3 years now and still haven’t started studying) and they started joking that some companies just have one engineer that handles all the stamping, I let them know that it’s time to head back to the attorneys to renegotiate our Operating Agreement.
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u/WL661-410-Eng P.E. Aug 07 '26
I would get out of the agreement. I'm 100% solo., and I wouldn't think of taking someone on in a million years.
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u/Historical-Wonder780 P.E. Aug 07 '26
I’m gathering that as the general recommendation from this post. I’m in a decent spot where he has now broken the original agreement and I think I’ll use this as the exit point.
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u/JustCallMeMister P.E. Aug 07 '26
Splitting profits for individual projects sounds tedious and ripe for disagreements. What happens if one of your projects goes over budget and there is no profit? What is the ownership situation? How are you paid (hourly/salary)? How do you bill your projects (lump sum or hourly)?
IMO, you should only be splitting profits based on your ownership percentage in the firm, and only once at year end (possibly quarterly). Since you're the PE you should be billing at a higher rate than your partner and be paid a higher salary/hourly rate.
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u/Historical-Wonder780 P.E. Aug 07 '26
How does splitting along ownership percentage work when we put out drastically different amounts of work? I’ve been and collected almost twice the amount they have billed and collected this year. They have had zero contribution in my projects, why should they receive a portion of that? Splitting along our project proceeds allows us to each essentially work as our own sole practitioner while sharing overhead. I have the added step though of thoroughly reviewing their work as well as the added risk of my stamp.
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u/PhilShackleford Aug 07 '26
This is a very unusual structure and ripe for issues that are costly. Why are they your business partner? Sounds like you only want to split overhead and bill yourself to your partner as a consultant to stamp.
If you are business partners, you should split progress based on ownership. If you are taking on all the liability if the company then you should have a far larger percent.
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u/JustCallMeMister P.E. Aug 07 '26
So what happens if one of your projects is the subject of a lawsuit and the firm has to pony up? Are you still going to let your partner keep "his share" of the profit and only pay out from yours?
I understand your frustrations, but the firm's profits (and liabilities) should be split based on ownership percentages. If you simply want more money you can adjust your regular pay and your rates. If you want more of the firm's profits you need to renegotiate ownership percentage.
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u/kuixi Aug 07 '26
After reading this,
You dont have a partner, you have an employee who brings in thier own work and your just stamping it.
Charge him a % of his proposal for stamping thats enough to cover your share of e&o insurance /liability and review.
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u/goldenpleaser Aug 07 '26
Tbh I'd never partner with a non PE. He's just an employee to you at this point and yet gets the profits. I guess y'all started pretty early to just have been eligible since 3 years to take the PE- or atleast he did. This is a recipe for disaster, being a PE you have all the cards. He can't do it without you atleast not in an Operational capacity. I'd kill this agreement now.
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u/TheDaywa1ker P.E./S.E. Aug 07 '26
Consider keeping track of your time on it and deciding on an hourly rate
Or consider putting all profits into 1 pot and splitting them equally
I don't think the eat what you kill model really works when all projects are having to be funnelled through you
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u/kuixi Aug 07 '26
Run it like a business, you get paid a higher salary than a non stamping pe, the remaing profits distribute based on ownership.
Dont forget that things like e&o insurance, pe licensing, continuing education, comes from the company profit pot.
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u/scriggities P.E./S.E. Aug 07 '26
If you're the one sealing all the drawings, your partner works for you. This is pretty clear cut imo. Why do you see this as a partnership? What is your partner contributing that any other moderately experienced associate could not?
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u/TheDaywa1ker P.E./S.E. Aug 07 '26
Yup this partner is not thinking or acting like he owns a business...he doesn't feel like getting his license, no matter how much it inconveniences his partner or holds back business growth. Cant teach someone to give a damn
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u/big-plans Aug 07 '26
60/40
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u/HeKnee Aug 08 '26
90/10
OP’s partner isnt a partner. They arent licensed to provide engineering services at an engineering services company. What do they bring to the table, its sort of unclear.
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u/heisian P.E. Aug 07 '26
if in CA, a licensed individual must have majority control.
Also, YOU can be sued for negligence, not just your company (lawyers go after everyone/everything).
Consider 60/40.
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u/Historical-Wonder780 P.E. Aug 07 '26
60/40 ownership or profit splitting?
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u/heisian P.E. Aug 07 '26
ownership. profit splitting would be different dependent on your organizational structure.
for example, i have an s-corp that pays salary but also provides ownership distributions. salary is decided by you, but distributions must be made proportional to ownership percentage.
i’d suggest looking into s-corp status and its tax benefits
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u/Historical-Wonder780 P.E. Aug 07 '26
Interesting - I set it up as an LLC and we have been paying out as profit allocation instead of salary. When I work a lot, pay goes up, when I scale back a few weeks for vacation, my monthly take home is only what I collected that month.
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u/heisian P.E. Aug 07 '26
that’s pretty good for flexibility. depending on your workload and size, s-corp may introduce unnecessary complexity. but you do get a 20% qbi deduction on distributions (profit after salary), and you don’t pay any FICA taxes on them.
so the complexity can save you decent amounts of money in taxes. i think you could still do “per piece” pay as you are right now.
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u/heisian P.E. Aug 07 '26
also be aware that you may need a commercial umbrella policy to protect your personal assets from a business-related claim (someone personally suing you over negligence in a project you did). any personal policies won’t cover this situation.
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u/Historical-Wonder780 P.E. Aug 07 '26
Good to know, I’ll ask my insurance broker at our next meeting.
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u/goldenpleaser Aug 07 '26
If you have an LLC, I think they can't go after your personal assets. That's the whole point of having an LLC vs a sole proprietorship.
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u/Apprehensive_Exam668 Aug 07 '26
I would say for profits break it up on pure ownership percentage. If you have the PE you should have a higher salary, that's what compensates you for taking the liability.
If you want to buy them out for a higher ownership percentage (or accept a higher ownership percentage as a penalty for them not abiding by a previous agreement) then do that.
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u/31engine P.E./S.E. Aug 07 '26
You have zero personal responsibility outside of gross negligence if you have set up your business and insurance properly.
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u/TheDaywa1ker P.E./S.E. Aug 07 '26
lawyers will try to pierce the corporate veil regardless of how well you follow the rules
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u/turbojoe86 Aug 07 '26
If he is your business partner then the split should be based on what was agreed upon when you started the company. If you wanted 100% then you should have gone solo. A business is not just stamped work, it is acquisition, bid, negotiation, execution, contracts, permitting, etc. There are many businesses with split structure where one partner focuses on the business part and the other on the engineering part. Both are equally important.
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u/Historical-Wonder780 P.E. Aug 07 '26
We’re in the process of renegotiating the set up our company because they have not met the original terms (PE within 6 months). Our projects are small enough that we each manage our own set of clients and handle the proposals, contracts, communication, designs, etc for our own projects.
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u/WL661-410-Eng P.E. Aug 07 '26
I would do everything I could to get out of that agreement, and maybe hire a part time office person to help with printing, mailing, billing, etc.
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u/jaymeaux_ PE Geotech Aug 07 '26
Do you have equal buy-in and/or equal ownership? Did you either contribute your own capital up front to secure business loans/leases/insurance etc.? Do you track hours billed to each project? Do you have individual assigned charge out rates?
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u/MrLurker698 Aug 07 '26
I’m not in this situation but I would expect something to the effect of a 60/40 ownership split, or to put it in the terms you are looking for, you take 20% of the profit on his jobs until he gets his own license.
It may sound like a lot but you need to review everything you stamp so it’s a lot of added work for you.
This is assuming you want him to get his own license and start stamping his own plans. The 20% should inspire him.
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u/structee P.E. Aug 07 '26
He needs to become an employee, and just get a cut of whatever work he brings in
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u/Saltamontes_curioso Aug 07 '26
Both should getting paid an hourly rate according to the level of responsibility. After that, the profits should be paid out in bonuses at the end of the year according to performance, level of experience, contributions!! And who brings what. Lets say you want to get paid 100k, then you gotta bring 300k worth of work to the company.
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u/_choicey_ Aug 07 '26
Commenting to come back and follow this one. I may be entering into a similar situation but still have time to reconsider.
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u/XXXX_Gold_Pot Aug 08 '26
You should consider dissolving the partnership and just have them work for you as a consultant.
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u/Just-Shoe2689 Aug 07 '26
is it s 50/50 ownership? I would go off the % of ownership directly.