Legal Question in Business Law in California

Well, the first question: (1) Are the companies really partnerships with other individuals who are participating in the business or who own some part of the business. The second questions is (2) are your various exposures to liability the same and/or are the assets vulnerable to that actions of one of the partnership teams. Please keep in mind that one of the purposes and functions of a "legal entity" is to create "fire walls" between assets, both personal and business as well as from one business to another

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By Grace...

Shawn Jackson ESQ. (707) 584-4529

Business Development Attorney

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First, I observe no mention of the other partner(s) in your supposed partnership business. The California Revised Uniform Partnership Act makes no specific reference to one-person partnerships, but case law shows that a partnership must have at least two partners or it fails, or ceases, to be a partnership and must wind up and go out of business as such.

If indeed you have partner(s), will the proposed new business activity include them, and does the partnership agreement properly and sufficiently cover the financial services activity?

If all the other aspects of the present and proposed business activities are well thought out and organized, I see no reason why XXX Development Partners could not adopt the name XXX Financial Partners. Both of them would need to file fictitious business name statements!

I don't think the IRS is especially concerned about a partnership that already operates as AB&C adopting a second fictitious name, XY&Z, so long as the umbers being reported are accurate and the incone is allocated properly on the K-1 schedules, but if the list of partners, or their percentages, differs between the two, the IRS will consider them two different partnerships and probably will require two separate tax returns.

On the other hand, there are some yellow flags here, and maybe a red flag or two. First, why conduct these businesses as partnerships? Seems unnecessarily risky, especially where one of the businesses proposes to provide financial services. As you no doubt know, this is a highly regulated area, especially if you ever handle or advise regarding other people's money, and the risks to you and your partners are very high. Second, there seems to be little reason to combine the two businesses in the same partnership, and if you are relying upon continuity for IRS reporting purposes, I hope you have solid professional advice that this is of some value, as I don't see it....is the tail trying to wag the dog?