Hello,
A partner and I started a Ebiz here on and now we are having a friendly separation so that we both can pursue other endeavors. We were a partnership in MA, but we never set up a partnership agreement. We both are on the business certificate (aka DBA form) and on the EID number. I want to make sure that I completely leave the business so that I am not liable for any future matters concerning it. This is my first business and I really need some help. What should we do to make the separation legal? Are there specific forms that need to be filled out, I know I should use a lawyer but $ is tight right now. Any suggestions?

Thanks a lot

Oh no, no partnership agreement.....

This agreement tells exactly how you are to settle profits and debts in the event you want to end the partnership.

Anyhow, if you do not have a partnership agreement you are liable for 50% of everything and you are entitled to 50% of everything no matter what your capital contribution was since you have no agreement. In the case he/she was to actually take you to court since you do not have a partnership agreement.

If you guys are selling off your assests, liquidating them or whatever, then you receive 50% and they receive 50% after all debts have been paid. If there is still debt to be paid after the selling of the assests, you are liable for 50% and he/she is liable for 50%.

I know, foolish. But I am leaving the business and he is going to continue it. So we are not selling off our assets. I terms of me legally leaving do you have any suggestions? Do we need to apply for a new business certificate with only his name on it (as both of ours were on the other one) and/or do we need a partnership dissolution drawn up (but we never had a partnership agreement in the first place)

Thanks a lot.

Maybe this will help:

nolo.com

I'd say check with the state agencies for specific info, but def. a new bus. certificate for the company. You don't want your name associated with the business at all. If you are listed as a business partner with any of your vendors (on a credit application for instance) you'd want to be sure that you are removed from the records.

Yes once a partnership is terminated then new information has to be drawn up. The same goes for if you added or dismissed a partner.

You need to completely dissolve this partnership and then "sell" him the assets so that he can form his new entity. Get a lawyer. With a partnership, you are held personally liable and you'll want to sever your relationship appropriately, especially because you didn't have an agreement to start that would spell out how a dissolution would work.

Good info, thanks a lot folks. Anyone know a good lawyer in MA?

Purple Kitty is correct. You need to dissolve everything protect yourself from future liability. All licenses, etc., should be terminated and written dissolution agreement should be executed. If the business name suggested a partnership, the name needs to be changed.

While all of this takes time and can be a pain, it will protect you from future problems.

Thanks guys, sdlaywer, is it safe to assume that you are a laywer? Can you tell me a little bit more about how exactly to dissolve everthing.

Thank you

Do you have an accountant?

I was involved in a business once - as a partner - and when I got out, our accountant wrote up the papers. It was much cheaper.

Taltos1,

Yep, I am a lawyer. I am hesitant to give you any specific advice because your situation is going to be governed by MA law. I practice in California and am not familiar with MA law.

Since the split is friendly, you are simply looking for something in writing that will cut off your potential liability. In CA, you would file a form with the Secretary of State and execute a dissolution agreement. Whether things in MA work the same is something I don't know. I would chat with a lawyer if I were you. Fees should be low because there is no dispute. Call your local "Bar Association" for a list of business lawyers and get quotes from a few.

Hope that helps,

SDLaywer

Nope, no accountant, we were doing things ourselves. Thanks again for all of your help guys.

let this be a lesson to all of you - NEVER, EVER form a partnership. Only LLC's and Corporations.