Question of the Day: Business Partnership

Question:

“I have a small business.  I have an employee that has been with my company for 23 years.  Well, around 11 years ago I decided to share the profits to show thanks to him for sticking with me during the not so great times . Never actually declaring him as a “partner” he is paid on a profit basis.  He is going through a divorce and his wife wants money.  Does she have any basis for going after my business?  He does use his capitol as well as I do to keep this business running (as far as purchasing supplies).  He is paid very well & is very upset with her !! Thanks in advance !”

Answer:

To succeed in arguing that the arrangement between you and the employee is a partnership, his wife must prove that the intent of the parties was to form a partnership. The court may consider evidence such as a sharing of profits or gross returns, the sharing of liabilities and any agreements to make contributions of money or property to the business, management responsibilities, the amount and type of services rendered by the parties, and the title to any real or personal property used by either of you for the business. You should consult legal counsel before pursuing any other actions.

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