Business Partnerships

[GeoffCapes]

Just wanting to pick the brains of those in business with someone else.

I have two businesses, one which I have run solely for over 8 years and another which I have with another guy, which we have had for coming up to 3 years.

I've just done a bit of an audit on the expenses for the company and it 'appears' that my business partner has been, basically taking the p*ss!
His mileage expenses are ridiculous, he puts through the entire cost of land line rather than the work calls (over a year it comes to over £500!), and worst of all it looks like he's been using our company money to fund another company of his.
We also employ his wife for a grand a month to do the books, and in my opinion she can only do about 2 or 3 days a month at best!

My quandary is that I stand to make a load of money from the other company in a couple of years time when it is sold, however, in the meantime I don't think it is right that he is syphoning funds from our company to pay for the other especially when I am bringing all of the money into the company and have yet to receive any income from it.

I'm guessing we would also owe the tax man a fair wedge as well rather than it being 'expenses'.

I figure he owes our company about ten grand.

Anyone else dealt with such issues?

 

[Nayf]

I can't offer any meaningful advice but you have my condolences. My wife went through something very similar.

 

[zagatoes30]

Step 1, have you talked to him about your concerns?

 

[GeoffCapes]

Step 1, have you talked to him about your concerns?

I've laid it all out, chapter and verse, in an email, stating all of the facts and most importantly the figures.

I've a fair idea what his response will be (a load of waffle and then try to brush it under the carpet).

 

[zagatoes30]

I've laid it all out, chapter and verse, in an email, stating all of the facts and most importantly the figures.

I've a fair idea what his response will be (a load of waffle and then try to brush it under the carpet).

Step 1 - Complete at least it's now all in the open

 

[Mr.Cambio]

Businesses have this kind of figures. One works hard and one works a lot less and spends a lot. No matter how many mails or conversations you will trade with him, things will never change. Just learn your lesson and build something on your own next time. Good luck.

 

[ChrisQP09]

Unless I am stupid but it seems like his actions are fraudulent!

 

[GeoffCapes]

Unless I am stupid but it seems like his actions are fraudulent!

Possibly, taking things to the extreme.

 

[rockits]

I've had a pretty identical experience with a Director I brought in/kind of merged with in 2014. He is no longer and we parted ways less than amicably late 2015.

Your lucky...his useless wife cost £2.5k a month and his expenses came to circa £35k.

I've moved on and written it off, all chalked down to experience.

It wasn't the sole reason for our parting and actually one of the lesser issues.

I had always been on my own until then with no issues with myself.....well a few but that is another story!

Trouble is I'm back in a place where I am far far far too busy and need help. It gets tiresome wiping bottoms but a partnership can work. However I see more partnerships that are unbalanced to the point it is an issue compared to fewer partnerships that really work.

I have no exact answers but discussion and dialogue to raise the issues is healthy so the starting point.

There is nothing criminal he is doing but maybe there could be BIK issues personally but no business issues.

I had to treat the guy like a kid and cut up all his credit cards and access to bank etc. which of course starts you down a certain path of unlikely return. Which is exactly what happened. I think the final nail in that coffin was when I in essence sacked his wife. All for the best interests of the business without question and 100% the right decision but of course it isn't well received.

 

[Scaf]

Geoff

Never been in the same position but would agree getting your concerns out in the open is a good first step.

I am guessing you don’t want to fall out with him so suggest :

• both of you meet with the accountant to review all expenses and any tax implications.
• if there are some he won’t want the complication so that should stop it.
• if there are none, you should claim the same level of expenses ......
• Have monthly meetings to sign off on each other’s expenses

Have joint signatures/ authorisation on payments (this should stop him moving money into his other Company) and would be advisable anyway in this world of scammers etc
- get a wrecked engine block from Voicey, a length or rope, tie it to his ankle and pop him in the canal late one night.
Best of luck

 

[GeoffCapes]

I've had a response to my email, and some of what I expected has happened.

A load of waffle, admittance to £500 of expenses that he shouldn't have claimed.

A bit of a grey area about £6k of expenditure which I will have to do more research (although I haven't really got time), but the massive overriding thing I'm seeing is massive, massive wastage of money on pretty pointless stuff.
Like 3.5 grand on a bit of kit for one client that doesn't really work and little chance of repeat business. If I'd known the cost I wouldn't have bothered!
700 quid on updating two computers to Windows 10. You can buy two new ones for less!

Words will need to be had!

 

[MarkMas]

I wonder whether he was thinking of this as ripping YOU off, or ripping the COMPANY off, or ripping the TAXMAN off, or just not really thinking about it properly at all.

His mindset and motivation might determine how he reacts and what kind of resolution you can get. A friend of mine was in a similar situation and found that his partner had assumed that my friend was doing exactly the same as him. His idea was that part of the point of having a business was to charge as much personal expenditure as you could get away with to the business to avoid (evade) tax. He was really surprised to realise that they weren't both doing exactly the same, and was happy to undo some of it (after some confused messages). They actually parted ways not because one person was taking from the other person, but because they disagreed on how 'pure' they should be with their business and tax accounting.

Also, I don't think you should be doing this by email - it automatically heightens the risk of confrontation as well as leaving a paper trail you might both regret. Discuss it face-to-face, and then you can go down the amicable, litigious or lesson-learned route.

 

[MarkMas]

....A bit of a grey area about £6k of expenditure .... massive, massive wastage of money on pretty pointless stuff....

This seems like a separate issue. I guess you need to decide if he is a thief, a chancer, a spendthrift or an idiot. Or a mixture. The resolutions are probably different for each,

 

[rockits]

The Director involved with me had no house, assets or anything of value. Lived his life month to month and just obviously wasn't good with money or cared. As quick as he spent it he would just earn more to keep the gravy train going.

However one day it will stop or crash. Our business at the time was a kin to driving along at 100mph seeing a brick wall coming and heading right for it. I thought it was sensible to take steps to try to avoid the wall and crash. His take was I'll deal with the consequences after I've crashed.

I found out he had been made personally bankrupt many years before which was undisclosed. Some people just don't plan, budget or car for the future. Some us can't not do so. Very different people and they say opposites attract but not in this case.

Trouble is I'm busier than ever and have the least resources I've ever had!

I found it was better I looked after the purse strings and planned budgets/expenditure etc. just letting him getting on with what he did best....selling. Problem was after 12 or so months that slowed/stopped as well.

Maybe site down and talk the current and past issues through and agree an amicable, sensible and viable plan to deal with the future. Some people recognise their strengths and weaknesses and need some help in some areas.

It is hard when you are working you knackers off to fill up at the top when it is all leaking out the bottom. I prefer to keep leak free and less need to top up so much!

Certainly better out in the open and discussed. Issues occur when trust is broken which is what we had. I didn't trust him for good reason. What p1ssed me off more though is he said he didn't trust me for why I will never know.

 

[empzb]

Depending on how he reacts, assuming he plays the **** hat, do you need him?

I was sending some graphic designer work, and he got annoyed when he found the markup I was putting on top. Now aside from him being risk free and just having to work whenever he fancies it for a bit of side cash it became a thing and he would get petit every time we came to agree pricing, so I found another and he gets the odd crumb but nothing else.

If you can, could you set up another company and replace him and bring existing work with you?

I'm not cold hearted so would only advise doing this as a final **** you, but worth pondering.

 

[Wanderer]

I worked with a another bloke once, IT business, he suddenly gave up and presented me with huge bills about what he'd spent (on his own bat) in the past etc. I was only 30 or so and quite handy then, so I told him to so one or I'll do him. Never heard from him since.

Since then I work with me only, which limits me as I'm not thick, very astute and not a big head at all, but I am aware I can't pitch for business and do the the actual work as well, so I'm stuck at certain turnover level, which to be fair is far higher than the national average wage so I'm not complaining, but I do feel like I'm cruising, and at my time of life (58) it just feels like passing the time till I die, I do need a challenge and I'm looking for one, maybe with my brother who is a builder and knows construction inside out, trouble is he still owes me £64,000,000,000 from double or quits when I was 14 (and he was 10, unfair, but that's business!)....

 

[rockits]

You can pitch, sell, win and do the actual business as well

Shame you're not my neck of the woods. I need help and have too much work. Nice little business really and has so much more potential to do more. I just can work any more or harder than I do already.

I sometimes wish I was useless, as being useful is very useful to lots of people unfortunately or fortunately....I'm not sure which one.

 

[Wanderer]

You can pitch, sell, win and do the actual business as well

Shame you're not my neck of the woods. I need help and have too much work. Nice little business really and has so much more potential to do more. I just can work any more or harder than I do already.

I sometimes wish I was useless, as being useful is very useful to lots of people unfortunately or fortunately....I'm not sure which one.

I go anywhere! Last 3 years Dublin, Copenhagen, Edinburgh, and err, Sheffield!

Maybe we should PM, I'm free and not single but we got our own careers so that no issue - I'm basically Unix/banking/Dev Ops/MQ....

 

[rockits]

LOL....not afraid of moving around then?!

Sure drop me a PM with your details and I'll fire over a quick smidge of what we do. Our stuff is pretty basic but very broad. Not so much up your level but the complexity is in the variety and broadness rather than any deep individual technical level.

 

[Wanderer]

LOL....not afraid of moving around then?!

Sure drop me a PM with your details and I'll fire over a quick smidge of what we do. Our stuff is pretty basic but very broad. Not so much up your level but the complexity is in the variety and broadness rather than any deep individual technical level.

Will do that tmrw, can't now because I'm watching '90 Day Fiance' - priorities!

Not afraid to go anywhere, even Sheffield...