Can we use a business agreement to legally bind these special circumstances?

[Judyinfinity]

What is the name of your state? TN

A family member and myself are going into business together. Since she had a personal bankruptcy last year, we've elected not to structure our business as a partnership but as a sole proprietorship in my name. The business will be located in her home (best location) and will lease the space from her.
1. Can she license herself as an independent contractor and work in my office in her home or must she work in a different room?
2. Can we create a legally binding "operating agreement" stipulating that once the business is profitable and will stand on its own merit, she will be listed as a full partner?
3. Or can her personal bankruptcy affect the business for the full ten years?
FYI We will be dealing with government contracts.
Thanking you in advance for your time

 

[hexeliebe]

BE VERY CAREFUL

The court of appeals of Tennessee at Nashville on December 7, 2000 in the case of Deborah G. Harvey v. Felipa B. Covington, d/b/a Choice Corporate Training International ruled the following:

"The existence of a partnership is not a question of the parties' undisclosed intention or even the terminology they use to describe their relationship, nor is it necessary that the parties have an understanding of the legal effect of their acts. It is the intent to do the things which constitute a partnership that determines whether individuals are partners, regardless if it is their purpose to create or avoid the relationship."

In other words, it doesn't matter how you protray the business, if your relative is anything more than an employee the government can come in and petition the court to find it a partnership.

Without more information as to the business type, or the tasks you will be offering, that's about as specific as I can get.

 

[Judyinfinity]

Thank you, looks like she needs to be an employee instead of an independent contractor to prevent any repercussions down the road.
I appreciate your taking time to respond.