Is Your Business in a ‘De Facto Partnership’ Without You Realizing?
Many business owners unknowingly enter into de facto partnerships, which can have serious legal and financial consequences. Even without a written contract, courts may consider two people business partners based on their actions.
At Landry Legal, PLLC, we help business owners avoid unwanted liabilities by clearly defining their business structure.
What is a De Facto Partnership?
A de facto partnership exists when two or more people run a business together but never formalize their agreement. This means:
- Both individuals share profits and losses (even if one contributes more).
- Either partner can bind the other to contracts or debts.
- If one partner is sued, the other may be liable—even if they didn’t approve of the decision.
🚨 Biggest Danger? A court may consider you in a legal partnership even if you never agreed to it in writing.
How to Avoid Unintended Business Partnerships
✔ Form an LLC or Corporation
This provides legal protection and ensures your business isn’t considered a general partnership by default.
✔ Have a Clear Partnership or Operating Agreement
Spell out ownership percentages, decision-making authority, and financial responsibilities.
✔ Use Written Contracts, Not Verbal Agreements
A handshake deal can lead to legal headaches—always document business arrangements.
✔ Separate Personal and Business Finances
Mixing personal and business accounts can make it harder to dispute a partnership claim.
Protect Your Business from Unwanted Liability
If you’re running a business with someone else—even informally—you could already be in a de facto partnership. Take action now to clarify your legal standing and avoid disputes.
For legal guidance on structuring your business, email us at contact@landrypllc.com or call now at 888-914-0011
