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socrateaser
socrateaser, Lawyer
Category: Legal
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Experience:  Retired (mostly)
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My business partner and I have an business where we are 50

Customer Question

My business partner and I have an business where we are 50 50 owners, but he works for a salary as a working manager and I am a silent partner by which I do not get paid except for our end of year financials and taxes. My partner is now no longer putting time into the business, but still taking his salary and I am now getting calls from tax collector and some vendors. This is a retail business and the daily business is working but now have part time worker working full time and we are getting behind in the bills. For the first time, my personal has been affected because we had to file a extension on 2012 tax filing because the work he was supposed to do and he promised to do did not get done. Do I have any legal avenue to move forward on either removing him from payments, does he owe the business any money for not working but taking money, thus making him pay back via say a loan, dissolve the partnership and let the company go back to owner who is owner financing? I do not know if I have any legal recourse.
Submitted: 1 year ago.
Category: Legal
Expert:  Thomas McJD replied 1 year ago.

TMcJD :

Hi, I will be happy to assist you, and it is my goal to make you a very satisfied customer! This may take a few minutes, so thanks for your patience.

TMcJD :

Do you have a written partnership agreement that provides he shall work and draw a salary for that work? Does the partnership agreement address recourse for breach of the agreement? Does the partnership agreement address removal of a partner of dissolution of the partnership?

Customer:

I just answered the click to chat.

TMcJD :

Do you have a written partnership agreement that provides he shall work and draw a salary for that work? Does the partnership agreement address recourse for breach of the agreement? Does the partnership agreement address removal of a partner of dissolution of the partnership?

Customer:

I can't read your chat but one sentence at a time, small window and didn't see it. No, we do not have a written contract.

TMcJD :

That makes things far, far more difficult. I will opt out and allow another expert to assist you who may be familiar with the everyday works of specific Idaho law on the matter. You don't need to do anything until another expert enters the chat and greets you. Thanks for you patience.

Expert:  socrateaser replied 1 year ago.

Hello,

 

Different contributor here. Please permit me to assist.

Is your business registered with the state as a limited partnership (LP), limited liability partnership (LLP), limited liability company (LLC), or corporation (INC))?

If not, then is your partnership based on a "handshake," or do you have a written partnership agreement?

Thanks in advance.

Customer: replied 1 year ago.

LLC

Expert:  socrateaser replied 1 year ago.
Okay, thanks.

The only means of legally stopping this mess is to petition the court to dissolve the LLC on grounds that the partners can no longer operate the business effectively. Simultaneously, you could ask the court for a restraining order on the business accounts, so that only bills to vendors can be paid, and no additional funds can be appropriated.

Alternatively, you could offer to buy out your partner, or sell him/her your interest. But, if the partner is stealing from the business, you must either terminate the operations or simply allow the misappropriation to continue, because you don't have much choice -- given that you do not want to operate the business yourself.

That's really what it boils down to. If you permit your partner to continue operating the business, and for example, he/she does not remit sale tax to the state, you could find yourself stuck with a huge tax bill, because your partner won't be able to reimburse the business for the unremitted sales taxes.

So, you will have to make a choice. Get involved in the business on a daily basis, so that you can stop the bleeding; buy out your partner; or sue to dissolve the business, if your partner won't voluntarily agree to close the doors.

Please let me know if I can be of further assistance.
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 34114
Experience: Retired (mostly)
socrateaser and 12 other Legal Specialists are ready to help you
Expert:  socrateaser replied 1 year ago.
Hello again,

I see that you rated my service as "OK." Experience tells me that customers who rate at this level are generally not entirely satisfied with the service received. If you require further clarification or assistance with this question, please let me know and I will try to help.

Note: Please do not reply to this memo, unless you actually have a follow-up question. Otherwise, the system will force me to respond, even if you are simply saying, "no thanks."

Best wishes.

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