Legal Question in Business Law in California

Re: Owner's draw

His draw should be reflected in his capital account. When you split, depending on how your partnership agreement reads, you should each receive the positive balances in your capital accounts. Then you will split the excess according to your ownership percentages. That way, the $11K your partner drew will reduce his distribution upon your split or liquidation.

One big caveat is that you need to closely read your agreement to verify how funds are to be distributed upon a split or liquidation.

Re: Owner's draw

Don't expect to get a legal opinion without a review of the joint venture agreement and the books. You may contact me directly if you'd like a legal opinion.