So my business partner and I started an LLC in Philly about two years ago. Things are going okay, not amazing. Last week he told me he needs to pull $4k out of the company account to cover his rent and some credit card bills. I said no, that's not what the account is for. He got pissed and said since we're 50/50 partners he can do what he wants. I told him that's not how it works. Now things are tense. Anyone deal with this? Am I overreacting?
LLC Partners
My Philadelphia LLC partner wants to use company money for personal bills
Not overreacting. That's commingling and it can pierce the veil if things go sideways. He needs to take a distribution or a loan - with paperwork.
lol 'since we're 50/50 partners he can do what he wants' - ask him if he also wants to personally cover the LLC's debts when the IRS comes knocking
Right? I tried explaining that but he's not hearing it. He thinks because both our names are on the account its fair game.
Do you have an operating agreement? If not, PA default rules might actually help you here - but honestly you need one yesterday.
This is why I refuse to go into business with friends. Anyway, the fact he wants to use company money for personal BILLS and not even calling it a distribution tells you everything. He's not treating it like a business.
FWIW DrexelDiva is right but also - if the operating agreement is silent, you might be stuck with the statutory default. In PA that means equal rights to manage. Which is a mess. Get a lawyer, both of you.
4k for rent AND credit cards? Philly rent is no joke but sounds like he's been living above his means for a while and now the LLC is his piggy bank. Nip it now or next month it's 8k.
Honestly if he's already this entitled about it, the partnership might be cooked. Not saying lawyer up and dissolve tomorrow, but keep receipts of every conversation from here on.
Update-ish: we talked again and he agreed to 'hold off' but he's clearly still sulking. I ordered a template operating agreement to fill out together. We'll see.
sulking is fine. sulking means he knows you're right and doesn't want to admit it. hold the line.