Purchase & Sale Sale Sole Proprietorship

[Bnscott]

Jurisdiction

California

Hello,

I am trying to sell my Yoga Studio. I am sole proprietor, in 2019 I had an instructor come to me requesting to work toward partnership. In return she offered her services for free. It's been a long complicated road from there. While we did verbally agree to partnering, we never agreed on a percentage nor do we have any formal documents. There are 3 bank accounts associated to the business which are owned by me, she is a signer on the Opex account. To be totally open and honest here, I have given her way too much access to everything. One of her responsibilities was the banking and payroll. She has changed the password to the income bank account and has not given me access, the account is owned by me.

What I would like to do so that the studio can continue to operate for our community is walk away with what is in the savings account and give her Opex and a profitable business. My question is whether or not I have the legal right to do so, or if there could be backlash because of our verbal agreement?

 

[Zigner]

You're going to want to speak to an attorney...

 

[flyingron]

I agree with ZIg. Verbal agreements can be binding and "signature on the accounts" depends just on how that was done. A lawyer will take a look at the facts with an eye on what matters and what does not and advise a course of action.

 

[adjusterjack]

While we did verbally agree to partnering, we never agreed on a percentage nor do we have any formal documents.

You and she better sit down with a business attorney and a CPA/tax pro and figure out how to resolve it.

If you get it wrong you might owe the IRS a lot of money.

 

[zddoodah]

I am trying to sell my Yoga Studio. I am sole proprietor

Ok...so what exactly is it that you want to sell? A sole proprietorship is not a legal entity that can be sold. By contrast, shares in a corporation or a membership interest in an LLC is something that can be sold. You say you want to sell a "studio." Does that mean you want to sell ownership of real property? Or maybe you want to transfer interest in a lease? Maybe all you want to sell is a client list?

What I would like to do so that the studio can continue to operate for our community is walk away with what is in the savings account and give her Opex and a profitable business. My question is whether or not I have the legal right to do so

The first thing you need to do is eliminate the word "give" from your vocabulary as far as a business transaction goes. Beyond that, you have the legal right to sell anything you own (unless there is some restriction on any of your business assets that you haven't told us about).

or if there could be backlash because of our verbal agreement?

No one here could intelligently tell you that no "backlash" is possible

You're going to want to speak to an attorney...

Agree. Your post describes multiple mistakes that could have been avoided. Don't compound those mistakes by trying again to handle this yourself.

and a CPA/tax pro and figure out how to resolve it.

If you get it wrong you might owe the IRS a lot of money.

Yup...that too.