Legal Question in Business Law in California

Will a general partnership work for me?

I have a sole proprietor business in medical transcription and would like to take on a partner. The problem being, my "partner" and I do medical transcription and will be working on the accounts we have, as well as one or two independent contractors. We get paid by minute of dictation and our production varies from each other on a constant basis. My question is, do we have to split everything 50/50 on what we personally make, even though there can be a large discrepancy?, and of course we would split the independent contractors revenues 50/50. P.S. what kind of partnership would be best for us? Thanks.


Asked on 2/13/00, 4:34 pm

4 Answers from Attorneys

Roger Renfro Renfro & Associates Law Corporation

Re: Will a general partnership work for me?

This response assumes you are a resident of CA who is conducting business in CA. Your questions are good ones. You are right to be concerned about sharing profits and assuming liabilities for your "partner". You may have additional outstanding legal liability and taxations issues though (e.g., whether the two individuals are, in fact, independent contractors). Before you make any further representations concerning your existing business structure and operation to your potential new partner, you should seek the advice of a local business law attorney regarding your concerns and several other issues you may not have even considered (e.g., forming an S-Corporation as an alternative, who is responsible for prior liabilities of the business, including future assessment of possible failure to withhold payroll tax and make payment of payroll tax, worker's compensation -- both former, current, and future, allocation of income received from existing customers, and the like). Good Luck.

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Answered on 2/16/00, 11:20 am
Christopher Enge Law Offices of Christopher J. Enge

Re: Will a general partnership work for me?

Let me echo what the other attorneys have said. You have a lot of freedom to set up your company how you want it. You should consult a good business attorney in your area, as well as your accountant. Not only are there liability issues to be concerned about, but the company structure will also impact your taxes. Let me know if you are in Northern California or need a referral to someone in your area.

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Answered on 2/16/00, 12:07 pm
Montgomery Pisano Peninsula Law Group

Re: Will a general partnership work for me?

You can structure partnership interests any way you like - 50/50 60/40 etc. However, the possible losses would be attributed the same way (without an agreement that states otherwise). Of course, make sure you put it on paper and have the parties sign.

Additionally, you may want to consider incorporating (s corp) or a limited liability entity. Not only protect yourself and your business partner from liability, but to make the differences in profit spitting and ind contractor revenues easier to disburse.

I highly suggest seeing a corporate law Attorney to properly form a business entity. Feel free to call or email me with any further questions.

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Answered on 2/15/00, 7:57 pm
Ken Koury Kenneth P. Koury, Esq.

Re: Will a general partnership work for me?

A partnership can work fine for you. you can divide up the profits any way you want. If you live in Southern Calif I can help you.

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Answered on 2/16/00, 2:40 am


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