In today's Freedom Friday blog and email newsletter, I want to talk about something that I get asked about a lot in an LLC where there is more than one owner, and that's problems with business partners.  This can come in the form of a business partner who is a problem, or who is causing a problem, or maybe the prospective client knows their business partner is a problem, and they're looking for what to do about it, for example, removing the business partner from the business, buying the problematic business partner out, or some other solution to separate from the problematic business partner.  So, in today's Freedom Friday blog and email newsletter, I am answering the question, “What are common problems with business partners?”

When you are starting a business with other people, you need to vet your business partners.  Even partners that are “friends” can go awry.  So, what are some common problems with business partners?  First of all, you might find financial discrepancies.  If you begin to notice unexplained losses, discrepancies in financial records, or unaccounted for funds in your business, then that may indicate some sort of fraud.  Second, you should also look for unusual behavior on the part of your business partner.  This could be avoiding discussions about finances, getting defensive when asked about expenses, or exhibiting secretive behavior.  Major changes in how a business partner handles routine business matters also may indicate a problem.  Third, lack of transparency may be a major cause for concern.  If your business partner doesn't want to share financial information or doesn't want to allow you access to business records, then that's a major problem.  This is especially an issue if your business partner has been responsible for paying bills for the business.  Lastly, from an accounting perspective, you need to look for unexplained expenses.  If there are large or unexplained expenses in the financial records without corresponding documentation, then that's very concerning.  Not only do you need to look for large line items in the P&L or ledger, but you also need to look for unusual credit card expenses, taking early draws from the business, and giving you or other partners a corresponding draw.

If you suspect that your business partner is stealing from the business, or committing other fraud, its critical to seek legal advice and gather evidence before you take any other action.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/