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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 90269
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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My son bought an airbrush business for which he left the name

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My son bought an airbrush business for which he left the name as it was, paying the ex owner a thousand dollars a month. When filling taxes he does the business as a DBA under the owners Inc, is this legal? He has been in the business for almost a year now and the IRS is saying he cannot do this any longer. The business is struggling to stay afloat, but the ex owner had let my son use his accounts to purchase supplies, my son can't pay those bills, now the owner pulled the plug and won't allow him to use the accounts to purchase inventory, etc and he can't get a line of credit for at least 4 more months! What should he do?
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

I am afraid that he cannot work under some other party's DBA. He can switch the company over to his name, since he purchased the company and he would have to obtain his own EIN number from the IRS and file taxes under his own EIN.

If he had a contract with the former owner, even a verbal contract, then both your son and the former owner must honor that contract I am afraid, which means your son has to pay his bills and if he does not the owner can shut him down and can sue your son for all money he owes.

Your son has an option of filing for bankruptcy, which would extinguish those debts to the former owner and everyone else he owes. If your son does not file for bankruptcy for whatever reason, his only other option I am afraid is to negotiate some deal with the former owner or come up with some investors in his business who can put up some money for a share of any profits when he finally starts to make money. These are his options.



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Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 90269
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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