Bad Business Partner

Discussion in 'Growing and Managing a Business' started by AtWitsEnd, May 6, 2010.

  1. AtWitsEnd

    AtWitsEnd
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    Hello
    I found this forum and signed up today, because as my name states, I am at my wits end. I have made a terrible mistake, but I believe it is not too uncommon.
    My husband and I went into business late last year and created a Tattoo Studio with a man whom we apparently did not know at all. It has been 9 months since we opened, and he has yet to pay anything to utilities, licensing, or supplies. He ordered a $600 LLC agreement without our consent, and paid the down payment for the insurance, which he never paid ever again and we lost our insurance. While we reserve over 60% in the agreement, he has stolen the shop receipts and informed us today he was at a lawyer 'to protect himself.' I have paid for everything out of my bank account, so I don't know what good those receipts will do him.
    He also has no good credit, and because of this, everything is in my name. I am omitting one crucial part to my story, this man is a junkie. He takes Oxycotin and other big narcotics on a daily basis, this makes him impossible to reason with. He did not pay for any of the renovation costs, down payments on the building, anything for utilities and supplies and he even doesn't pay his half of the rent every month. I was just informed that he had done this for a few months, by our landlord; not him. Not only does he not pay for anything, he is also a very unpleasant and uncombed person. I want to make him leave and try to save the business, but I think that we will just have to cut our losses and do something else for awhile. It would be nice to be able to save the business, because we have worked so hard and have become somewhat of a success, but he was the one who was supposed to know about the IRS forms, and he has done nothing. So, I could take a crash course on how to run a business, and my advice to anyone that is just reading this, please, please, check references with everyone, even if they pull the wool over your eyes and make themselves sound really wonderful, the minute we signed the lease, everything changed.
    Thank you in advance to anyone that has anything to help me out, or reassurance. I would appreciate any kind of help. Thank you.
     
  2. Kay

    Kay
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    Sorry to hear about your troubles, AtWitsEnd. Welcome to Business Advice Forum. First and foremost, do you have a written business contract with him, something you can take to a lawyer yourselves that will show what his share of the running costs to date are?

    I'm guessing he ordered the LLC in an attempt to cover his own tail because he knew you'd eventually and quite rightly pursue him for his share.

    You can read more on LLC's here.

    Get a lawyer and fast is my best advice and find out if that LLC agreement stands since you had no knowledge of it and didn't give your consent. I feel this is too complex to not rely on legal advice, especially with your own personal credit being involved. I'd be consulting the lawyer about changing the locks on the premises too so he no longer has access and can't steal any more records.

    I get the impression this isn't the first time he's done something like this when he's went down the LLC road without telling you.

    If you're not wanting to get a lawyer, consider going to a small claims court. Your state may be able to get you some justice through that channel. How much you can get awarded depends on which state you're in. The range is from $1,000-$15,000 according to this article on small claims rules. Without knowing what state you're in it's hard to help any further on that.

    I'm so sorry to hear about what you're going through and that I don't have the expertise to help you further. Good luck.
     
  3. Fergal

    Fergal
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    Welcome to Business Advice Forum AtWitsEnd, thanks for joining and for posting your business questions. I'm sorry to hear that you have found yourself in this unfortunate predicament. I'd agree with Kay that you should get professional legal advice on this matter, as soon as possible.

    From what you say, it sounds like you will never be able to work with this man. If I was in your shoes I would try to get out of the business and cut all ties with him as a matter of urgency. You have already spoken to your Landlord. What kind of agreement do you have with this landlord? Who's name is the agreement in? Is it possible for you to terminate the rental agreement on the property and simply walk away from the business?

    Good luck with it and please post back with your thoughts.
     
  4. AtWitsEnd

    AtWitsEnd
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    Thank You

    Thank you everyone so much for your advice. We have another meeting with the landlord next week and we are going to discuss with him about changing the locks, if there is any hope of him letting us stay. I am going to have a really nerve racking weekend, considering its Mother's Day, my first one. I'm going to have to block this all out until Monday, because that's the first we can talk to the landlord.
    I'm guessing he got the LLC because of exactly what you quoted there. He wanted to get loans in the LLC name, he is just too (excuse my language) stupid to figure anything out about any bank loans. Plus, he spends most of his time passing out from his doctor shopped prescription pills.
    I believe it is going to come down to, if he doesn't leave quietly, we will pull out of the business, and he is too poor to hire any lawyer. My husband is a talented man with a wonderful following, and this so-called tattoo artist is dragging his good name through the mud.
    Thank you everyone for all of your thoughts and advice. I have a lot to think about this weekend. Happy Mother's Day to all you Mothers, I know exactly how hard you work now!
     
  5. Fergal

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    Enjoy your Mothers Day AtWitsEnd, at you deserve it. Good luck with everything next week and please do post back to let us know how it works out.
     
  6. makatiofficespace

    makatiofficespace
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    There should be trust in every business partner. But you should not forget that business is business
     
  7. Andi21

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    It is better to fire him of your business and do all alone and also get all earnings. So your business can grow up again.
     
  8. OnlineBusinessZen

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    I started my first business with a partner. While he was a great person and is still a friend, the joint business was a dismal failure. However it was an important lesson for me when I set up later successful businesses.

    I would certainly consider disbanding or removing him from the business as soon as possible - consult a lawyer and find out the best way to get started.

    Brad
     
  9. Kay

    Kay
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    I have no idea what you meant there. Please elaborate on the latter part about business being business. Why would that be a "but"?
     
  10. sigma

    sigma
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    i think i can understand what s/he trying to say.
    S/he means that they should actually trust out partner if run the business in partnership.
    On the other hand, they shall also have black and white in all the business related document although they trust each other.
     
  11. AtWitsEnd

    AtWitsEnd
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    No signatures on the LLC

    Hello!
    I am trying to take my name off of the LLC our old partner purchased. I have looked up this LLC on the internet, and its under his name only. When I obtained the folder with the LLC, there were no signatures on it at all. We have not taken out any loans or anything of the such like bank accounts, under the LLC. I was wondering if I have to do anything at all to remove myself from this situation completely. I would apprecitate anything to help.
    Thank you
     
  12. Fergal

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    Are you based in the US?

    You might benefit from contacting the IRS to get advice on your specific situation. Do you have an accountant or legal advisor?
     
  13. Kay

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    AtWitsEnd, I merged your new thread about the signatures and Fergal's post with your previous thread that gives the background to the situation. Members can advise you better when they know more of the story. :)

    Haven't you contacted a lawyer yet? I really think you need to.
     
  14. AtWitsEnd

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    Yes, we are based in Florida.
    This business has drained all of our assets, and I dont know how we could afford a lawyer or any kind of legal advice. Like I said, there are no signatures on the LLC paperwork, and if I look up the LLC, there is one with the same name in Michigan. The only entry about our LLC is under his name; and the fictitious name. We havent put hardly anything under the LLC, and honestly we just want to walk away because this guy will cause more problems the other way around. If he thinks he's getting a good deal, let it be, he's on drugs, he's not that clever.
    How can I even tell if we are on the LLC under some bigger official? Like the IRS, where is it that I am registered under this LLC? (I know this question might be a little elementary for some people, but I am really new to this business world, so thank you for your understanding:)
     
  15. Fergal

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    Contact the IRS they should be able to tell you.
     
  16. pakiboyg

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    Finding the right partner for the right business is next to impossible.
    Making a partnership business is only Good Luck something.
     
  17. BizDoc

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    LLCs are registered with the Secretary of State in the state you live so call them. They should be able to provide the documents registered.

    Good luck!
     

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