Should my husband have access to all business documents as a 50% owner in a LTD business? He’s listed on the IRS Schedule K as the Limited Partner.
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Should my husband have access to all business documents as a 50% owner in a LTD business? He’s listed on the IRS Schedule K as the Limited Partner.
My husband is 50% owner of a LTD business, founded in 2007. His share of the business loss (I think he’s the limited partner) was $15K in 2007 and $48K in 2008. Our personal accountant is asking for the Articles of Incorporation, the Partnership Agreement and the complete tax return in order to amend our taxes for the last two years and take advantage of his business loss. We owe taxes for 2008 and these amendments will probably cover our debt. We are incurring IRS penalties and interest at roughly $2,000 per month. Unfortunately, my husband’s partner says we only need what the business accountant provided; the Schedule K-1, Form 1065, Partner’s Share of Income, Deductions, Credits, etc. and will not provide anything further. My husband will not push this and believes what his partner is saying. Our accountant says they must have answers to many questions about his involvement in the business in order to file the amended tax return. The partner suggests we get a new accountant. Isn’t my husband entitled to the information? It feels like someone’s hiding something.
Asked on May 20, 2009 under Business Law, Ohio
Answers:
B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
It feels like someone is hiding something to me, too. What your accountant is asking for does not sound unreasonable to me. Your husband should talk to a small business attorney in your area, as soon as possible, and one place to start your search for the lawyer you need would be our website, http://attorneypages.com
In general, a limited partner doesn't have a right to participate in day-to-day management decisions, but he does have a right to see all the business records on a reasonable basis. I can think of a few reasons why your husband's partner wouldn't want to provide these relatively basic documents -- which aren't even all of what your husband should be entitled to see -- and the least unpleasant of those reasons is he doesn't want to miss his tee time at the golf club, or he's too cheap to pay for a few extra photocopies.
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