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Sole Proprietorship Managed by Others

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1 Sole Proprietorship Managed by Others on Fri Feb 09, 2018 9:56 am


Arresto Menor
I need legal advises. I had put up a business in the south which i asked my closed relatives to manage it for me since they have the skills to run it. They actually recommended it for me to finance their skills. The business basically is a service company.I live in manila but i am an ofw. Everythime im home i could only manage to visit my business at least 1 week throughout my vacation time.

Since we have run this business, never got any gains from the company and its always like it is in the losing end where i always add for capital to pay for the bills and salaries of employees. Though it is less than a year yet and had invested almost 1M but the problems are:
a. i dont see progress though it keep on saying its less than a year yet
b. they are always questioning my pakikialam on how to run the business as they think they know everything
c. they start talking nonsense and ill at my back
d. they ignore my instructions and procedures i asked to be implemented.

Since i felt its not going anywhere i asked them of four options:
1.  Let them borrow the capital that i lend. We will assume that they will just borrow my money so i wont deal with them and will put like a 5% interest monthly and all the liabilities and responsibilities will be theirs that will be initiated with an SPA.
2. We will sell the business so my capital will get back
3. I will re org and completely manage it myself.
4. Close the company

Option 2 is actually the best option but the concern is on who will buy my business and when it will be bought that we still need to be managed. But my worried while waiting for this, things to happen and may be late and my capital has been gone to drainage.
Option 3 is not feasible for me as i still need to have somebody to run the business for me since i am an OFW and my wife cant do it as she takes care of our children.Trusting someone is another concern or will have loyalty for me and not with them since they will be working together all the times.
Option 1 is a big issue. They dont want to take my capital as theirs so they wil not pay for interest and its not a debt and they wanted to just continue how they run the business but dont want to take the responsibilities and liabilities such as:
1. If they issued a bouncing check and my name is the owner of the bank account, then i will be sued for BP22 and not them.
2. If the client complained and sue us for the poor service or irregularities then since i am the owner i will take all the blames and responsibilities and not them.
3. If employees complaint then it will be the owners responsbility

Option 4 is actually good and no more issues unfortunately, it doesnt stop from just closing the business.
a. my capital will be gone and may have to shell out more money
b. need to pay all my employees or they could complain to labor
c. tedious process of closing out business-DTI, busines s permits, SSS, BIR, philhealth, Pagibig, barangay, and whole nine yards.

I need some legal advises on the following:
1. best option for me to work on such as WIN-WIN approach for me-to the relatives whom i trust so much and to the employees
2. Is there any case that i can file for those relatives who i think they drained my money?
3. Since they are running my business, can they forced to sign on the waiver about responsibilities and liabilities like a court order so i will not be liable of anything that i dont have control of except i own the money and the business is under my name?

Appreciate all your feedback.

thank you

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2 Re: Sole Proprietorship Managed by Others on Sun Feb 11, 2018 10:31 am


Arresto Menor
Would really appreciate if i could get some feedback.

Btw, what/ who is Arresto Menor? Im sorry im very new here..

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3 Re: Sole Proprietorship Managed by Others on Wed Feb 14, 2018 7:35 am


the options you provided are fine, but whether they will accept them is another question. unless you can prove that there has been fraud, your losses are just the risks in business

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4 Re: Sole Proprietorship Managed by Others on Fri Mar 16, 2018 3:50 am


Reclusion Perpetua
Since this is sole proprietorship, the business is an extension of your person, so the gains and liabilities will really pertain to you. If you want to limit your liability, you have to incorporate your business. Try this, to understand doing business under a separate personality.

This, however, will require you to undergo the tedious process of closing a business. But if you really want that kind of arrangement where you only invest money on the business without being financially liable in your personal capacity, then this is the way to go.

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