Partnership liabilities

ach45

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

Savvy_Sue

I think this may be a situation where you need 'proper' advice rather than whatever we can offer here. 

To my simple mind, if there's no legal agreement then he can just set up a Ltd, and if you want nothing, it's all his problem from them on. 

But if you have been filing tax returns for each of you PLUS the partnership, then it may not be that simple, and at the very least an accountant's advice should be taken. 

Wiser advice may follow ...

EnPointe

ach45 said:

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

is this partnership registered as such with HMRC ? 

mybestattempt

ach45 said:

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

As your husband wants the business to continue you leaving would be a technical dissolution and your husband should be left with 50% of the net worth/equity (assets minus liabilities).

Of course you could agree to a different split but with £250k partnership liabilities you can't just leave all of these behind where they are joint debts.

I think you should seek professional advice on how best to navigate the steps you and your husband want to take as the partnership doesn't appear to have any equity at the moment and there are jointly owned assets and joint debts.

In addition to ending the partnership informing HMRC and then making the correct tax returns will need to be addressed

tacpot12

My partner and I wrote our own partnership dissolution agreement, using models and information available from the internet. Our change was agreed mutually, which made it easier.  

ach45

mybestattempt said:

ach45 said:

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

As your husband wants the business to continue you leaving would be a technical dissolution and your husband should be left with 50% of the net worth/equity (assets minus liabilities).

Of course you could agree to a different split but with £250k partnership liabilities you can't just leave all of these behind where they are joint debts.

I think you should seek professional advice on how best to navigate the steps you and your husband want to take as the partnership doesn't appear to have any equity at the moment and there are jointly owned assets and joint debts.

In addition to ending the partnership informing HMRC and then making the correct tax returns will need to be addressed

Thanks for your insight. When you say professional advice would yiu suggest an accountant or a solicitor or another professional would be best placed to help?

mybestattempt

ach45 said:

mybestattempt said:

ach45 said:

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

As your husband wants the business to continue you leaving would be a technical dissolution and your husband should be left with 50% of the net worth/equity (assets minus liabilities).

Of course you could agree to a different split but with £250k partnership liabilities you can't just leave all of these behind where they are joint debts.

I think you should seek professional advice on how best to navigate the steps you and your husband want to take as the partnership doesn't appear to have any equity at the moment and there are jointly owned assets and joint debts.

In addition to ending the partnership informing HMRC and then making the correct tax returns will need to be addressed

Thanks for your insight. When you say professional advice would yiu suggest an accountant or a solicitor or another professional would be best placed to help?

I would go to an accountant as they can review the overall financial position and should identify whether you would need a solicitor and/or other specialist involved at any stage of the process.

Mistral001

ach45 said:

I've run a small business for the last 20 years with my husband. It's a 50/50 partnership but with no legal agreement. 

For various reasons I have reached a point where I want to leave the business partnership. 

What is the process for dissolving a partnership (OH will then set up a Ltd Co to continue the business)?

We have assets and liabilities which more or less balance one another out but the figures are substantial at c.250k. How can I protect myself from being held liable for the debt? I'm not seeking for him to "buy me out". Is it unreasonable of me to expect to walk away with nothing?

Thanks for your advice. 

Surely, a married couple do have a legal agreement regarding money matters.  You might need legal advice on this, but as far as I can see, unless there is a Ltd company, or some other entity such as a business partnership agreement drawn up by a lawyer, you both have a legal requirement to share the profits/assets from the business equally.