We started this business over a year ago. Our company is 50/50. But, I did everything from paperwork, starting a home office for it (required), etc. His only requirement was find workers for when we’re ready. That time came, he had no workers. I tried myself to find workers for a couple months and couldn’t.
In total, I paid $2500 more into the business than him. This was mostly because every-time I asked him to pay a bill, I got a sob story of how he was broke, his kids needed things, or etc with promises that I’d be reimbursed once we were making money. Mind you, I was unemployed and using credit cards while he still had a job at this point.
Now, we are talking about dissolving the company. I brought up how much he owes me and he kept saying I could file it on taxes. Which maybe I can as a deduction, not sure how it works, but taxes don’t owe me money. He does. He ended up saying he’d talk to his lawyer on what we need to do about the taxes. He wasn’t even hearing me about paying me back, just kept talking about taxes.
Well, now I’ve made a consultation to get more guidance on if I even have a legal right to this money. Am I the asshole for bringing lawyers into it? Part of me feels like I should let it go. It was absolutely stupid of me to trust I’d get reimbursed and to pay those bills. Absolutely stupid. And he has a family. He’s also my father’s best friend (my dad thought he’d be stand up guy and have no issue paying me). So maybe I should let it go instead of turning this into a big huge thing.
But also I feel taken advantage of. I did all the work. I did all the setup. He didn’t even have workers which was his only job and I had to step up to try taking that on too. I paid all this money. And now I feel like I’m being stiffed.
NTA don’t let him sob story his way out of money that he owes you.
NAH – but you need to weigh the amount that he owes you against the amount of time, effort, and money it’ll cost to get a judgement against him in court. Not sure if this’ll be something that can be handled in small claims court where you can typically represent yourself. Also- do you have an agreement from him saying he’d pay the 2500 and now he’s reneging? Or is it just that you paid more into the business than him? You might not actually have a legal claim. I’d seek the advice of an attorney. Whether or not he agreed to pay the money originally affects whether he’s TA. It’s definitely fair to seek advice of experts in situations that are complicated. I don’t think him having kids should play into it. They don’t give him a free pass to mistreat people.
NTA. But, lesson learned for the future- in a 50/50 partnership, all expenses need to be covered equally or nothing moves forward. Your “partner” in this case took advantage of you.
NTAH. You had a agreement, he didn’t upheld his job ( not sure about legality here), you did yours. That bills and stuff are split 50/50, it will be fairly easy to prove in court. I hope you have text, documents, contract, agreement that dictates responsibilities and pay structure, that bills are under the business name and or both of your names. If you do not get it through text messages simply “We started this business 50/50 correct?”. Your job was what? my job was to set things up.” Text messages can be used in court easily.
You should not worry about the friendship/dad BFF. Business is business, tax deduction your will get only 10% of value at best, so do not fall for that trick or counter him that he can do it himself after he pays you back.
Lawyer, go get couple of consultation listen to what they say, ask on how will they do it, etc. I think with the amount, it wont be beneficial because you will cover the legal fees. I think do your own research and represent yourself in small claims court in your county. I have represented myself and business multiple times, it doable and every time I learn more, this seems fairly easy to prove.
YTA a bit for starting a business with so little research or planning, and now bypassing a CPA and going straight to suing. You need to discuss tax implications and figure out what’s best from there. You sound like a child.
NTA. Can you propose a written, low‑drama repayment or settlement plan that you can both sign?
Btw tax treatment and actual repayment are separate issues. Even if some of what you spent is deductible as a business expense, that does not put the money back to you or cancel what he owes you.
Nta please don’t let him being your dad friend or him having a family guilt trip you into not doing what you should to get your money back. You owe it to yourself because no one but you will have your back so just do it and screw anyone who thinks your wrong in my opinion
I think the legal deternination on if he even owes you money based on the operating agreement will determine this one. You may have just lost 2500, and you probably shouldn’t keep communicating with this person until you know that.
NTA. You were naive and went into a business venture off nothing but promises and hope that people will do the right thing and not screw you over. He had someone with youth and energy promise him half of all their earnings if a business venture took off. He was an ahole for letting you do everything with the promise of getting money out of it even if he didn’t do his part, but it’s understandable that someone would accept money for nothing. Still ahole behavior, but that’s the situation you are describing.
The sad truth of it is that that amount of money is not worth lawyers. If you can’t get that money back from small claims court, then you will spend more than you will get back. Without written documentation that he agreed to pay those costs that money is lost anyway. A lesson that cost you $2500. Which is pretty cheap as far as business expenses go, but you also said that it was just the unpaid part of his 50/50 contribution so I’m sure the total costs don’t feel cheap.
In the future, don’t be nice about business expenses. If your business was being bought out right now and the buyer was going to give you 200,000 for it, would you feel like it was okay to give half to your partner? Did they do half the work? The main reason a business partnership would have an older and younger half is the older brings the professional connections and funds and the younger brings the time, energy, and enthusiasm. You shouldn’t have covered him and you shouldn’t have started any work under the 50/50 ownership assumption if it required you to do all the work until it was time for him to contribute anything at all.
Next time, get it in writing. Even if you were going into business with your own best friend you need to record who gets what and who owes what in writing with legal witnesses. Fresh out of school friends can believe nothing will ever come between them, but 10-15 years down the line if they can muscle you out for a larger share of a massive payout they probably will. Especially if the difference is generational wealth amounts of money because you wont even live in the same zip codes anymore so they don’t have to look you in the eye ever again.
Side note for those types of agreements, I went to a college that had seminars and speeches about this topic. If you are ever partner to a business with private ownership type shares(not sure the term for it, not traded on the stock market but still shares of a company) you need a clause that says that if you are ever bought out then you get the difference in price if the business is sold again in the next 2 years. No company will wait 2 years for an acquisition just so the person they are dealing with can get a bigger share from buying you out without telling you about the potential deal.
NTA, why do you think you owe him this gift?
You’re going to need an an attorney to dissolve the business anyway, and the settlement of all debts and the distribution of any assets will be handled at that time. Good luck!
NTA. Tell dad that in 2 weeks you will be finling a suit against your bizpartner for unpaid monies and you wanted him to know what had happened. Dad may actually be able to get you the money faster if they are indeed good friends.
ESH
The time to bring in lawyers was at the start. All the agreements between you and him needed to be documented, who was responsible for what, who contributed how much, what would happen if the business was dissolved. Doing it now is better than never doing it, but if things weren’t documented you may have a hard time recovering anything and in any case the lawyers will be the only ones to see much money.