All Tied Up in a Beau

We all know love is blind. But when it stops a partner protecting her best interests, it's also profoundly stupid

By Karen E. Klein

Q: My boyfriend and I started an import business which is solely under his name. Because I have bad credit from college loans, he said I can't be listed on our bank accounts just yet, although we did sign a contract saying that each of us owns 50% of the business. Am I protected by law? If not, what should I do? -- S.C., Denver

A:

In order to verify that your interests are indeed protected, you should get an attorney's advice about your situation and how to remedy it, if that is what needs to be done. And don't hesitate, either. Your boyfriend should recognize that, since you are putting time, money, and energy into this business, you owe it to yourself to make absolutely sure your efforts are protected.

Because you and he aren't married, there is no way the pair of you can operate the business as a sole proprietorship. It must be a partnership, corporation, or limited liability company (LLC). In order to make sure you are considered an owner, find out whether your name is on the IRS SS-4 form that must be filed with the Internal Revenue Service to establish a business partnership, corporation, or LLC, says Jan Zobel, author of, Minding Her Own Business: The Self-Employed Woman's Guide to Taxes and Recordkeeping.. If your name isn't on the SS-4 form, you're not considered an owner, says Zobel, no matter what your boyfriend is telling you.

HE'S GOT SOME EXPLAINING.

  Also, a business is required to register with the county in which it is based in order to obtain something called a "fictitious name statement," also known as a "doing business as" or DBA. If you aren't listed on those filing papers, you're not considered an owner, Zobel says.

"Lastly, but probably most importantly, any business being operated by two or more people should have a written agreement spelling out the ownership and expectations for each of the owners, as well as scenarios for what happens if one person dies, the relationship ends, or one person does more of the work than the other," Zobel says. Such a legal document would be your protection in this situation. As for the document you did sign, is it as thoroughly and legally binding as the one described above? Take it to an attorney and find out for sure.

Finally, the boyfriend's claim that he cannot put your name on bank accounts because of a poor credit score makes no sense. Says Zobel: "A business will have its own bank account, under its own name. Your credit history will have nothing to do with that."

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Karen E. Klein is a Los Angeles-based writer who specializes in covering covered entrepreneurship and small-business issues.