Dissolving Business Relationship

[BJMYERS]

In October of 1999 I started a antique business with another lady. This lady wanted to be a silent partner (she did not want her name on any documents connected to the store) so all leases, utilites, business liscence, taxes etc... are in my name. She is listed as a guarantor along with my husband on the lease. We both have put our own money into the business (supplies, inventory etc....) When the store was short on rent her credit card was used to make up the difference and it was agreed that the store would pay the charges. The store has not made a profit but has actually lost money. She has put more money into the store but I have put more hours. She has decided that she wants out of the store and wants me to pay her half of her credit card bill and retail price minus 20% for the inventory. What are my options?

 

[loku]

Even though there was no written agreement, you had a partnership with the lady. If partners do not specifically agree otherwise, they split profits and losses 50/50. When a partner leaves, an accounting must be made. In effect, each partner is given credit for any property and money contributed and for that partner’s share of the profit or loss. If you keep assets after the partnership dissolves, you would have to reimburse her for her share of the assets. Paying her portion of the debt on the credit cards would be one way of doing that.

This is a fairly sophisticated accounting task, so I advise you to hire a CPA or other accountant to handle this for you.