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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Im opening a business with a partner. He currently owns a

Customer Question

Im opening a business with a partner. He currently owns a mechanic shop, I became an investor to open a second one but he insisted in keep the same business account for both shops when the second one opens. From my point of view it will be very hard to
keep track of much we are making is all the expenses and profits for both shops are put under the same account. What can I do If I wanna have a clean idea of expenses and how much is left as profit when the second shop opens? Does it even matter if the both
shops use the same account? I think that we should have to discuss how to spend the money from our shop but if both shops are link to one single business account where is the primary he could do as he please.
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.

For best business practices, don't commingle the money from both businesses. Each should be its own separate entity for accounting clarity and also liability purposes. So, run the two as two very different entities. If you are investing, make sure that you specify what you expect and that you want an ownership interest in the second location. Work with a business attorney to draft an agreement. Otherwise, if there is no agreement he could take your investment and it would be hard for you to get any of your money back.

Please let me know if you need anything additional. If not, please rate positive so that I may receive credit for assisting you today. Thanks so much :-)

Customer: replied 1 year ago.
That was I was thinking, I kind took the shot of the business opportunity but seems to be more to it. We did signed and agreement where we stated that we will split the profits 50/50.Also he sent me a draft of the future expenses where he appears as the highest paid employee which we did not discuss at all. We agreed on working 40+ at the shop but he is not only "planning" on getting profit of the shop but also get paid salary. How does that work?
Expert:  Megan C replied 1 year ago.

Well typically you get a salary as an employee and then also you get profit sharing - but each business is different. If you live in a large metropolitan area, maybe contact a local law school to see if they can help you for a reduced fee or hire a lawyer -- there are many reasonably priced business attorneys (you may have to ask around) -- you really need a legal person to look over anything before you sign, and if something doesn't feel right go with your gut.