Irresponsible Biz Partner-No Longer Bankable?
Hi, My partner and I formed a corporation, received an EIN number, and set up a bank account in the city where he lives (I live halfway across the country from him.) He has had personal credit issues, left his personal bank account overdrawn, but was able to open this corporate account. Our startup company has not been profitable and he overdrew the corporate account and didn't have the money to refund to the bank once he plowed through a few thousand in startup capital from an friend/investor. He moved and has since returned to this city, and I have not been informed of any arrangements that he has made with the bank to repay the funds (possibly around $300-$500).
I have had a long-standing banking relationship with my own bank in the community in which I live. I have a personal account and have given my partner a debit card on a separate personal account and used that account to pay business expenses and also to help my partner with various expenses now and then. He does not have access to my banking information and does not co-own the account, but he does have the authority to sign checks and use the debit card. He has asked me to cash checks made out to the corporation and run those funds through my personal account.
I have since learned that this places me in a situation where I am personally liable, and that it is illegal to conduct business in this manner. My partner naively assumes that I can just set up another corporate account with my bank regardless of his previous banking history. I have refused as I live in a small community and do not wish to humiliate myself with my bank or draw attention to anything that I have ignorantly done wrong. Please educate me on the possible consequences of my actions, my partner's bankability, and whether it would be possible for me to open a corporate account with the same EIN number in my bank, and whether it is advisable. Given my partner's track record, I feel that I were able to set up an account, that I would need to retain sole control over corporate funds.
The only light that I can see in this whole situation is that we have the opportunity to form a new co with two other parties that can provide the structure, funds, and credibility. They are aware enough of the situation that they can get us bonded and provide safeguards against my partner's irresponsible handling of money and create the ability to channel money through the company in a legal manner that will absolve me of personal liability.
Any ideas and options would be appreciated.
Thank you!