Dissolving partnership

[David Fritsche]

undefinedWhat is the name of your state? Nevada

My wife's business - a 10 year old partnership - is changing. Her partner has apparently been working on taking over the entire business for some time and just notified her that she was out and all the contracts had been changed to her new sole proprietership, using the same name as the partnership.

Intuitively I know there is something wrong with this maneuver, but am not sure of the legal structures that cover it. Any help???

 

[Joseph_free]

What type of business structure do you have?

 

[ablessin]

undefinedWhat is the name of your state? Nevada

My wife's business - a 10 year old partnership - is changing. Her partner has apparently been working on taking over the entire business for some time and just notified her that she was out and all the contracts had been changed to her new sole proprietership, using the same name as the partnership.

Intuitively I know there is something wrong with this maneuver, but am not sure of the legal structures that cover it. Any help???

That was a shoddy thing for the partner to do to your wife. Didn't she have any indication this was going on?
What is in their contract about ending the partnership?

 

[David Fritsche]

That was a shoddy thing for the partner to do to your wife. Didn't she have any indication this was going on?
What is in their contract about ending the partnership?

Nevada has a statute that defines a partnership, where there is no formal filing and no agreement. So, a partnership does exist, although these girls do not care much about paperwork, records, etc. They have filed with IRS each year as a partnership, the bank account was set up as a partnership, etc....

She had some inclination that this was coming, but when it did come it was still a surprise. The real question for me is: Can her partner just get a new business license and IRS # for the existing partnership name and accept the checks from clients as then being funds to her new sole proprietership???

My wife does want to split the business, but thinks it is unfair for her counterpart to keep the partnership name and attempt to convience the clients that the business continues as usual.

 

[David Fritsche]

What type of business structure do you have?

Unofficial partnership - not filed with state, but have done their tax filings as partnership and set up business licenses and bank accounts as partnerships.

 

[ablessin]

Nevada has a statute that defines a partnership, where there is no formal filing and no agreement. So, a partnership does exist, although these girls do not care much about paperwork, records, etc. They have filed with IRS each year as a partnership, the bank account was set up as a partnership, etc....

She had some inclination that this was coming, but when it did come it was still a surprise. The real question for me is: Can her partner just get a new business license and IRS # for the existing partnership name and accept the checks from clients as then being funds to her new sole proprietership???

My wife does want to split the business, but thinks it is unfair for her counterpart to keep the partnership name and attempt to convience the clients that the business continues as usual.

No, I tend to think clients need to be informed, depending on type of business. Suppose Johnny came to the business because of your wife, he might not want to use that business anymore if Suzie is the only one running the show!
She maybe could get a new name, too,....it's unfair to your wife that Suzie get's it all while she starts over. New names for both partner sides would be a good idea. In my opnion. - - I'd insist that the other person rename the company...... also by doing that forces her to share the news with customers