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Debra, Lawyer
Category: Canada Law
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Experience:  Lawyer
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Im in a recent partnership of two months with one other person

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I'm in a recent partnership of two months with one other person operating a landscaping business. Lately we haven't been getting along and I've offered to tidy up the finances and then leave the partnership. In the present absence of a partnership agreement, what are my options for getting out of the partnership while allowing the remaining partner to continue the business? The other partner wishes to continue the business. Thanks in advance.
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Is your partner agreeable for you to leave?

Are there debts?

Are any in your name?

Did you invest anything in this partnership?

You are not incorporated are you?
Customer: replied 4 years ago.

Hello Debra,

Thanks for responding to my concerns. With respect to your questions,


1. Yes, my partner is agreeable for me to leave.


2. We are in the process of calculating the balance. As we are a two month old company with very low overhead, we are roughly breaking even. I would estimate that we could not be in debt by anything over $500.


3. There is no debt specifically in my name or in my partner's name.


4. As I am the only one with a credit card, I have invested about $600 in mostly service fees for setting up the partnership, WSIB, some tools and office supplies. I would like this amount returned at some point.


5. We are a general partnership in the province of Ontario registered since May 03, 2013.


I would like to leave because my partner has little business experience and is not open to my own experience (I have started two sole proprietorships, one of which is on-going). The partnership is also being run as a cooperative (this is the end goal) with the other workers however my own liabilities as a partner are not understood or ignored. I am the only one with any assets (I have a house).


This is a painting, landscaping, cleaning business with about $6,000 in business for June, and another $6,000 for July. While the business is good, there are concerns about running the business. I want to leave cleanly while allowing the business to continue in the same name. I'm hoping for a step by step process of ending the partnership, and removing my name from the CRA/HST, and WSIB obligations (they will be paid before I leave except for year end taxes).


Thanks in advance.

Essentially you would want an agreement signed by your partner to indemnify you for all debts incurred now or in the future.

You would want your name removed from all literature, invoices etc because you don't want to be sued if the partnership is sued.

But you need an agreement that if you are the partner will pay whatever a Court orders you to pay.

You will need to send in a change of information for the CRA and WSIB and be sure to remove your credit card information from every organization that has it including any stores for supplies.

If you had insurance you should also let them know but perhaps your insurance should be maintained for a while? This is something to ask the broker.

Does that help?
Customer: replied 4 years ago.

What about the change from partnership to sole proprietorship? What is needed for this process? Does the registry need any agreement about the change of ownership to allow this change?


Thanks again!

This would be done by a change of information submission that you would both sign.
Debra and other Canada Law Specialists are ready to help you
Customer: replied 4 years ago.

Can you please clarify the staement you made earlier?


But you need an agreement that if you are the partner will pay whatever a Court orders you to pay."



There was a typo.

You need an agreement that says if you are held liable then your partner pay you for whatever the Court says you are liable for.
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Customer: replied 4 years ago.

Thanks Debra Thal, your answers were very helpful and clear.

Thanks for letting me know!

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