Getting Rid of a Partner?

[foo]

My sister runs and owns a childcare business with her friend. My sister runs the childcare side of things as she has all the qualifications and the friend is supposed to run the business side of things.

I've wondered for a long time what the friend actually does and my sister is now thinking the same way.

Besides the lack of work it turns out she's paying for her groceries and making car payments through company accounts.

Apart from telling my sis to grow a pair and not take it anymore, I've suggested dissolving the company, splitting any profits etc and starting again.

Any other suggestions?

[coccinelle]

Or just offer to buy her out?

[jedimistress]

Is it a limited company or just a partnership?

[Skyline D]

You need to decide if this is a company or a partnership because it says "partner" in the question but discusses "dissolving the company" in the text.

Legal position is very different.

Other than potentially affecting the cash flow of the business there isn't really a problem at all in a partnership paying personal expenses for a partner as long as they are charged to drawings and not claimed as business expenses. A director of a limited company cannot do the same though unless they already previously invested surplus funds.

If the position is genuinely irretrievable and it's a company then you can either just cease and eventually get it struck off after paying liabilities and splitting assets or have one person buy the other out (though presumably there is no point in the one who has no licences buying it).

If it's a partnership it's a bit simpler. Again just split things up and start again or have one buy the other out.

There may well be issues with leases of premises of course?