Doing Business As?

Dave thinks that Kathryn's fiance and his painting partner should split their profits and costs down the middle but set up separate DBA accounts.

QUESTION: Kathryn’s fiancé is a painter.  He worked for someone else, but now he and his friend have broken off and have made this their own business.  They haven’t gone through the process of forming a company.  They’re just painting for individuals, not large companies or clients.  Should they set up a company?  If not, what should they do?

ANSWER: Two friends could end up not being friends if this business gets too big without being formalized.  They should just split everything right down the middle – costs and profits.  They should not have any joint accounts of any kind at the paint store, at the hardware store, or at any banks. 

They need to open separate DBA checking accounts.  This is a “Doing Business As” account that allows them to put all the money that they make from the business into their separate accounts.  Then when they have business-related expenses as well as taxes they can take it out of that account instead of dipping into personal accounts.  

They also need to put all of this down in writing, making sure everything is clear and spelled out between both of them.