Legal Question in Business Law in Tennessee

Business License Question

My brother, who has had lengthy credit problems, wanted a ''fresh start'' with his own business. He could not get a business license in his own name, so my mother got the business license for him. She did not share in the profits. My brother lives with us, so she did ask him to pay the electric bill and help with groceries. All of the business dealings were his own doing. Her name on the business license is all she had to do with it. My brother told her he would take her name off of the license soon, but hasn't yet. My brother has since gotten into trouble with the business (not paying contractors, not doing jobs, etc). My mother had no knowledge that he was doing this. Now my brother has essentially ''ran away from home'' (he is almost 40), and we don't know if he'll come back to pay his debts or not. My mother is afraid that she will be sued for the money he owes, since her name is on the business license. We are a low-income family, so this is a scary proposition. What kind of legal responsiblity does she have for his misadventures? Thanks and God bless you. :)


Asked on 1/02/06, 1:15 pm

1 Answer from Attorneys
Dr. Michael A. S. Guth Tennessee Attorney at Law Assists Pro Se (without a lawyer) Parties

Re: Business License Question http://michaelguth.com/prose.htm

What legal form did your brother create? I assume he did not take the time to get incorporated. Thus, he most likely has a sole proprietorship. If he indeed created a sole proprietorship, then your mother could be liable for debts that belong to the business. You mention that you are a low income household. Would it be possible for your mother to file for bankruptcy and get all of this resolved at once? She does not need to file for bankruptcy unless the creditors decide to sue her, but you should consider this option now so that you do not pursue it in a panic later on.

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Answered on 1/02/06, 1:21 pm


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