Starting a Business Liability in a Partnership??

[Ele73011]

Hello! I run a small bridal organization with a partner; we currently only have a DBA partnership & want to step up to something more secure. We each have our own individual businesses as well; mine is very successful and hers will be closing soon & is very much in debt. How can I protect my business & personal assets while entering a partnership with someone who has personal debt? If our mutual business is profitable, but she is personally in debt, do I run any risks by formally partnering with her? Or is our liability limited to any debts that our mutual business incurs?

Thank you!

 

[army judge]

Hello! I run a small bridal organization with a partner; we currently only have a DBA partnership & want to step up to something more secure. We each have our own individual businesses as well; mine is very successful and hers will be closing soon & is very much in debt. How can I protect my business & personal assets while entering a partnership with someone who has personal debt? If our mutual business is profitable, but she is personally in debt, do I run any risks by formally partnering with her? Or is our liability limited to any debts that our mutual business incurs?

Thank you!

You're the entrepreneur, and the financial wizard.
The other person has no clue, or is patently dishonest, or both.
You don't need her, she needs you.
Don't give her a piece of your pie.
Hire her, don't partner with her.

I'd tell her this way, "You know Sally, we better hold off partnering until you get your finances sorted. So, how about you work as a contractor, for $XXX a month? Or, you I could offer you 5% (10%, or whatever percent) of the monthly profits. We do it under a trial basis, informally, for six months. If we're both happy, your finances are straightened out, then we can discuss a partnership."