My partner quit... what do I do now?


1

We were registered as a partner business and we started to work together about 2 months then my partner quit without asking to split the share, she just said "sorry, thing went wrong in my family. you can hire assistants to help you with the works."
We running a small business with about $600.00 for equipments invested in it. And within 2 months running business things going very smooth and making much profits. I think, i am able to run business by myself and hire 2 assistants to work 4 hours/week.
The problem is we are signed the office lease for 6 years, should i come to landlord to resign the leasing paper? what about business registered? should i update it to a sole proprietoship?
Thank you

Legal

asked Feb 25 '12 at 09:48
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Alan Sugar
6 points
  • what country/locale are you in? – Tim J 8 years ago
  • Tim, i am living in Canada. – Alan Sugar 8 years ago

3 Answers


2

In the United States when one partner leaves (or dies) the partnership ceases to exist.

You should re-form the business and update your business registration. What form you want (sole proprietorship, company etc.) is up to you.

This is for your benefit as well as his. Consider what would happen if he left your country and got married while you worked on the business for the next ten years and it was worth millions. Then one day his wife shows up, tells you he just died and that now half of the business is hers!

You should prepare a written agreement that you both sign dissolving the partnership and transferring all the assets to you.

answered Feb 25 '12 at 12:41
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Jonny Boats
4,848 points
  • Is it ok to update business registration as a partner to solo by law? – Alan Sugar 8 years ago
  • Perhaps this is a nit, but it is not an update (the partnership ended), it is a new business (sole proprietor). – Jonny Boats 8 years ago
  • Yes, I think it may happen. i better ask my partner to sign dissolving partnership, but my worry is she is not pick the phone, i did called the first because of my concern to her, and the second time i called her she not p/u and 3rd, 4th...her phone alway busy. – Alan Sugar 8 years ago

1

You have a couple of different questions here so I will address them separately:

Business Structure : If you are making profits and want to continue the business, you should probably move the business into a company structure rather than a sole proprietorship - especially if you are going to take on employees. This will give you legal protection and positions your business to grow. It also means that the business is a new entity solely owned by you and which has nothing to do with your partner.

Lease: The landlord is unlikely to let you out of the lease because your partner left. One of the major sources of stress for business owners closing their businesses is leases - if you have signed for 6 years, you need to keep paying the lease whether you are using the premises or not and whether you are making profits or not. If you have a formal partnership and the partnership leased the office, then your former partner is also liable for her share of the rent.

It sounds like it is in your best interests to continue the business and grow it. It would be wise (as JonnyBoats has suggested) to ask your partner to sign a document assigning the IP and the assets of the business to you and relinquishing any active role, shareholding and right to profits in the ongoing business.

answered Feb 25 '12 at 23:12
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Susan Jones
4,128 points
  • We both siging the Lease, and responsible to paying the lease together. – Alan Sugar 8 years ago
  • i don't mine to take over the 6 years contract, but i having a bad credit since i finished my college, i have no job, used up visa card, and owing student loan. if i have a bad credit i wonder the landlord ok to let me resign the lease to solo. – Alan Sugar 8 years ago
  • He already has you as a tenant and knows you, so if you have been a good tenant it shouldn't be much of a problem – Susan Jones 8 years ago

1

I think the answers here have summed up just about everything, however just because your partner has left saying she has family issues, does not mean she will not return and cause you problem if your business prospers in the future. Did she mention that she will never return or do you just think her return is indefinite?

With out jumping to conclusions, and wasting more of your profit how about your ask her if she can still work but put in less hours? or just pay some of the lease? This way at least you won't be wasting much of your profits. Try to find a compromise and at least talk to her.

I say this not because you MUST have a partner or that you should be cheap and not hire someone to help you out. I am saying this because you should try to see if she can still comeback before making a huge decision and saying you want to be the sole owner.

Is she registered as a co-founder? if so, this might cause problems later on, I am sure a lawyer would be able to give you better advice. However, taking the extra step I mentioned earlier would help you because you can say that you tried to make a compromise and asked her provide lesser input but she did not want that, hence you removed her as a partner.

As per the lease, if you are profitable there is no point in getting out of it and you won't be able to anyways. See if you can lower the amount of years though! It just might work if you are extra nice to your landlord ;)

answered Feb 26 '12 at 14:45
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Bhargav Patel
784 points
  • Good point. Definitely worth talking to her and seeing a lawyer – Susan Jones 8 years ago
  • Sorry Susan i feel silly to ask. what is co-founder mean? Last night i went to shopping i met our friend, then i start asked him if he know what happen to my partner. He said that my partner's dad was died, his mom very sick, and he is only son living in a wealthy family. His mom asked him to come back home for funeral and his mom wanted to inherited all family properties before his mom past away. – Alan Sugar 8 years ago

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