Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Luminary
Relatives Should Never Keep the Books in a Business Partnership
Things were fine between me and my partner for the past 6 years. But lately he gets angry when I ask to see the bank statements. We had a great month last month but there is no money left in the bank account according to my partner. I just want to see where the money goes. Problem is, his wife keeps the books and I’m starting to wonder if they are taking extra money out. What can I do?
The Partnership’s Bookkeeper Should Never Be a Relative
For a partnership to work well, the partners need to trust each other. That means transparency is very important. One way to prevent future disputes over money is to have monthly meetings to review the books and related data. When a managing partner starts get ‘protective’ of the accounting data, there might be a problem in the making. If your partner’s spouse, son, mother, or some other relative handles the books, there might be a serious problem. It’s never a good idea to have a relative keeping the books.
Even when people get along well, having one partner’s relative handling the books just isn’t good policy. There is an inherent conflict of interest. You can see that. Another issue is that the bookkeeper/relative is being paid, should be paid, and that creates an imbalance in the household take-home money by one partner. Sure, mature people can work these things out but I still advise against it because having a relative in the books becomes a flash-point for conflict when a disagreement breaks out over some smallish money thing.
Another Reason to Not Have A Partner’s Spouse Keep the Books
When a spouse is that familiar with the inner workings of the business they will tend to exert some influence over the partnership and the business. “Honey, you work much harder than Bill and you should make more than him.” Comments like that can kill a partnership. I see it every day.
It gets even worse when adult children get involved at that level. It’s just wise to avoid the problem.
If you are in a partnership, go with an independent accountant.
Chris Reich recommends that you never use a partner’s relative to keep the books. It always leads to problems.
Bookkeeping Is Not Expensive These Days
Now that Quickbooks has a great online version, you can get professional bookkeeping services under $100/mo. for many businesses. Look around if you haven’t for a while. Get a few quotes. You’ll find that having a relative in there is just not worth the potential difficulty.
If you need a new bookkeeper and don’t know where to start, contact me and I’ll help you get started.
“Why deal with the grief of having your spouse in the middle of a business dispute? It’s not worth it. Partnerships should always have independent bookkeeping services.”
Let’s look at how to plan for the next generation of your family to run your business. It’s never too early to make a succession plan and the earlier you start, the more options you have.
How do I get out of my partnership? And, it’s the biggest reason I am always ranting about having a Partnership Agreement. Without a Partnership Agreement, your options are very limited. You accept anything your partner is willing to give you, or you can dissolve the business.
Somebody puts up money with someone who agrees to contribute labor as their contribution to an equal Partnership. Once things are set up, and a lot of money is spent, the other Partner fails to perform, and the troubles begin. I get 2-3 calls like this every week.
Partners take advantage of partners every day and they get away with it. It is the most painful call I get. It sounds like this, “I put all the money I had into starting our business. My partner had bad credit and no money, but he promised to do all the work to get the business going.