Collection Tip: Partnerships - Who is Responsible?

Partnerships - Who is Responsible?

If a partnership - where two or more people co-own an unincorporated business - goes out of business and still owes you money, you may think that money is uncollectable.

Legally, all partners in the business are responsible to pay 100% of the business' debts.

Consider the following example:

• Two people are in business together.
• The partnership goes out of business.
• Partner 1 goes bankrupt.
• Partner 2 still lives in the area and has gone into business for himself.

In the case described above, Partner 2 is still collectable and is 100% responsible for debts incurred by the partnership.

The Bottom Line:

Don't let partnership owners use going out of business as an excuse not to pay you back. As long as the company was not limited or incorporated, the owners are 100% responsible.