How Would I Best Explain The Difference Of Retained Profits And Goodwill in The Dissolving Of A Partnership?
Much To My Dismay My Business Partner And I No Longer See Eye To Eye. We Started A Small Cleaning Business About A Year Ago And Now I Would Like To Sell My Share (50%) Of The Business To Her. For Every Job We Got Paid For We Put Away 30% of Total Earnings Into A Savings Account To Help Cover Taxes In The Future. We Have Seen An Accountant And Are In Agreement On The Numbers. However She Does Not Seem To Understand That Half Of The 30% We Put Away Would Be My "Retained Income" And That The Amount I Am Asking For The Business Are Two Seperate Things. She Thinks That If She Pays Me My Retained Income That She Has Paid Me For My Share Of The Business And That We Can Dissolve The Partnership. But By Doing This She Is Essentially Just Trying To Give Me My Own Money To Pay For The Business. Does Anyone Have Any Suggestions On How I Can Explain This To Her In Simple Terms. She Says She In Confused And Doesn't Undestand Where I Am Coming From. Thanks For Your Help!!!
Asked By: Lauren - 8/10/2007
Best Answer - Chosen by Asker
Well first I am a CPA. The structure of your partnership is what needs to be understood. If you are an LLP or LLC then you received a K1 at the end of the year and that profit was taxable on your personal return. Even if you dissolve the partnership you will have the same type of income this year to date from your... More
Answered By: W - 8/10/2007
Additional Answers (1)
First, let me preface my response with I am not an attorney, so I am not offering legal advice which is what you may need at this point. Having said that, I think the first question is - do you have a contract? If so, what are the partnership terms? In other words how are the retained earnings divided... More
Answered By: wecaiorg - 8/10/2007
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