Help with leaving partnership?

thejoyces

Hiya

i have a business (small) that i run with somebody else we have a business loan and i'd like to leave the business and hand over everything to them, basically walk away - is it possible to change a business loan into a single name and also what is the best route out of the partnership - there is not legal paper work or agreement setup before hand? All help and advise greatly received, i'd like to leave it all friendly and do the right thing.

we have used the bl to invest in marketing, website and employing a telesales person so it's not as though we have used the loan for salary (I haven't taken a salary out of the busines and everything has been split 50/50) - do you think the loan should be cleared - as the other partner will carry on the business using said website, telesales person etc etc?

Thanks in advance

Bean_Counter

Hi,

Whose name is in the bank loan in? Is it the partnership, or is it you and your business partner as individual's?

Are you based in Scotland? I only ask as I believe that an ordinary partnership is a separate legal entity in Scotland, but not elsewhere.

Did you have to give personal guarantees to the bank for the loan?

Do you have an accountant who is doing the tax for the partnership and you and your business partner?

My initial thoughts based on the lack of more information is that the business loan is an important part of the business funding and should be left in place if at all possible. If necessary, the bank should be able to reconstitute the loan into the name of your partner, albeit they might want a business plan to ensure that the business would survive without you.

I would also get an accountant / lawyer to draw such documents that are needed to provide a clean break in the business. The most important thing is to make sure that you are not left with any personal liability for any of the business debts that have already been incurred, such as the bank loan, overdraft, PAYE debt, supplier debts etc.

Finally, make sure that a set of accounts are drawn up to the point of your leaving date and that you know what tax liabilities you have on any profits that you have made up to date.