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Subject:
Leaving a business partnership
Category: Business and Money > Small Businesses Asked by: customsoftware2003-ga List Price: $2.00 |
Posted:
15 Dec 2003 12:48 PST
Expires: 14 Jan 2004 12:48 PST Question ID: 287422 |
I am a vice president of a small business set up as a corporation. I would like to leave the buisiness and ensure that my name is Off the records as being vice president. How can I do this to ensure that I will not be liable for any more activity of the current business? |
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There is no answer at this time. |
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Subject:
Re: Leaving a business partnership
From: ipfan-ga on 15 Dec 2003 16:03 PST |
As a general rule, an officer of a corporation is not liable for debts, liabilities or obligations of the corporation in any event, unless there exist legal grounds to pierce the corporate veil. So unless you, as an officer, have failed to treat the corporate entity as you would any other unaffiliated party, you should be OK. What I mean by this is that all of your dealings with the corporation should have been at arm's length--even better if you treated the corporation as "someone you do not even really like" to make sure that there was, e.g., no commingling of funds, no discounted loans, no improper personal purchases or expenditures of corporate funds, etc. If bad facts like that exist, then even if you formally resign by tendering a letter of resignation to the Board of Directors (which is how you do it usually), you may still be on the hook for personal liability until all the relevant statutes of limitation have run out. |
Subject:
Re: Leaving a business partnership
From: customsoftware2003-ga on 15 Dec 2003 17:23 PST |
Thanks, to clarify... Their is no liability except maybe this coming years taxes which as of now the money to cover that is in our bank account. I just want to be sure that my name is off the company so that whatever my partner does when I leave never reflects back on me. How can I do this? is their a form of some sorts that I can fill out to tell the city/state, etc that I am not part of the business anymore? ...to make it official? |
Subject:
Re: Leaving a business partnership
From: ipfan-ga on 16 Dec 2003 08:29 PST |
Thanks for clarifying. Now I need to ask a question: I know it's hard to understand the difference, but when you say you want to be insulated against acts of your "partner," do you really mean he is your partner in a legal sense? A partnership is very different from a corporation. If he really is your partner, you need to formally withdraw from the partnership using the method provided in your partnership agreement, or, if none, by your state law. If you are using the term "partner" generically and he really is just another officer of the corporation, then you need to resign as an officer by giving a letter of resignation to the Board of Directors or by the method provided in your corporate bylaws. There is no "form" per se; but you can also send copies of the letter of resignation to the corporation's bank, creditors, landlords, everyone who does business with your corporation. You should also contact your Secretary of State's office and ask how the corporation's state filings can be amended to show that you are no longer a corporate officer. They may have a form for you to use. But again, remember, if you are truly only a corporate officer and the other guy is NOT your partner in a legal sense, once you resign as an officer you should be free of the other guy?s actions (assuming, as you say, that no facts exist to pierce the corporate veil). |
Subject:
Re: Leaving a business partnership
From: customsoftware2003-ga on 16 Dec 2003 21:26 PST |
Thanks for writing back. We formed a Corporation but we signed a generic partnership agreement. (I cannot seem to locate my copy). No board of directors. It's only the 2 of us working out of one of his basements. He laid out 10,000 to start I was the 'work horse' The company was forms 4 years ago. We had 3 1/2 years of suffering not making a dime.. I was doing all of the work. Now, we take in a few grand per week. sometimes a few grand a day. I am willing to give it all up. I just want out. I will try to locate the agreement. in the mean time If you can post up, that would be great. |
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