A 30% owner of a Texas roofing company posted on r/smallbusiness in July 2026 that he’d been put down as guarantor on a commercial materials account. After a year of silence from his 70% partner, a collector came to him for a $15,000 balance, and then he was shut out of the company bank account. He estimates $30,000 to $50,000 was taken in all. That’s his side of a dispute, and most of it turns on things two owners can settle on paper before their first job: whose name goes on supplier credit, who controls the bank account, what each owner is paid and how an owner gets out.
Put those in writing with a business attorney before money moves, because otherwise state law supplies the terms, and the IRS reads local law into any partnership agreement wherever the agreement is silent. In Texas, two people who run a business together as owners form a partnership whether they mean to or not, and with no agreement and no LLC they split profit equally and neither is owed pay for the work. Each is also liable for all of the partnership’s debts. An LLC keeps company debts off its members, apart from any they guarantee personally, but a Texas LLC member “may not withdraw or be expelled from the company” and is paid out on leaving only if the company agreement grants a right to withdraw.
Zentora is a marketing company, and we’ve measured nothing about partnerships. I went through 11 Reddit posts and comments about roofing partnerships and read the Texas statutes and IRS pages they raise. Apart from one Florida licensing rule the state law here is Texas, where I work. I haven’t checked other states, so read each section as questions for a business attorney and a CPA where you operate; the checklist at the end applies in any state.
Texas can make you partners before you sign anything
In August 2026 a 1099 roofing sales rep in Texas asked r/smallbusiness what to put in a contract. A friend with a year-old roofing company had offered him half the profit on jobs from an ad campaign they’d fund equally, and a path from joint-venture partner to 50% owner over about six months.
Under Texas law, two or more people carrying on a business for profit as owners create a partnership, whatever they intend and whatever they call it. Sharing profits and putting in money are among its signs, so the joint-venture label settles nothing by itself, and whether the deal made the rep a partner is for an attorney to say.
Partners with nothing written also get an equal say, with ordinary decisions going by a majority of ownership that two 50/50 partners can’t form. As I read the statute, which an attorney should confirm, that leaves two equal partners who disagree with no tiebreaker.
An LLC keeps company debts off you, apart from any you personally guarantee
Forming a Texas LLC costs a $300 filing fee, and members aren’t liable for its debts unless the company agreement says otherwise. A Texas general partner can be made to pay all of a partnership’s debts, though a creditor usually has to win judgments against both the partnership and that partner first. The LLC’s protection doesn’t cover a debt an owner guaranteed personally, and that’s how the collector reached the 30% owner, whose Social Security number had been on file since the LLC was formed. The SBA recommends an operating agreement for any LLC, even where the state doesn’t require one.
Texas won’t enforce a promise to pay someone else’s debt unless it’s written and signed by the person held to it. Whether that helps him depends on what he signed, and courts have made exceptions I haven’t researched. Ask each supplier which owners are on your account as guarantors, and get a copy of what each one signed.
A Texas partnership pays no partner for the work unless you write it in
A roofing and siding seller posted on r/Contractor in 2024 that his referral base brings in more than 100 jobs and $2 million to $3 million in sales a year. He lacks the qualifications for a contractor’s license in his city, so he wanted a partner to run production and crews. He didn’t name a state, but had the two of them formed a Texas partnership with nothing written, the partner running crews all week would take the same share as the partner selling, however lopsided the hours, and neither would be owed pay.
The IRS calls a set amount paid to a working partner, “determined without regard to the partnership’s income,” a guaranteed payment, and writing one in for each role pays both partners in slow years and good ones. An LLC with two or more members is taxed as a partnership unless it files Form 8832, so have a CPA set up each owner’s pay under the structure you pick.
For money put in up front, a Texas LLC’s default splits profit by the agreed value of each member’s contribution, and a promise to contribute cash or property is enforceable only if it’s written and signed.
Equal shares also leave open who runs things. One of two friends who started a roofing company on equal, minimal money wrote in 2025 that the other acts like the boss and dodges serious conversations. If one of you will run the office and the money, write that down, along with how much each of you can spend alone.
Put any equity you promise a rep or employee in writing
A co-owner on r/smallbusiness wrote in January 2025 that he’d been promised 2.5% equity a year for five years, capped at 10%, and told no contract was needed while the company was starting. At year end the founder said the company wasn’t worth anything. The co-owner then learned the founder and the founder’s brother-in-law had taken a $71,000 distribution, though a top commenter argued that a funding partner is often repaid first, so the payout alone doesn’t prove wrongdoing.
He gave no state. In Texas an agreement that isn’t to be performed within a year is unenforceable unless written and signed, which bears on any five-year equity promise, though courts have made exceptions.
For the rep’s six-month path to 50%, commenters suggested vesting monthly in place of a six-month cliff. An 83(b) election on unvested equity received for work must be filed within 30 days of the transfer, IRS Form 15620 says, and can’t be revoked without IRS consent. The form is written around stock, so ask a CPA how it applies to an LLC or partnership interest. To reward a strong rep without making them an owner, see How to Pay Roofing Sales Reps: 10/50/50, Profit Splits and Draws.
Agree how a partner leaves, and at what price, before anyone wants out
A partner who leaves a Texas general partnership is bought out automatically at “the fair value of the interest on the date of withdrawal,” unless winding up starts within 60 days. A partner who leaves early in breach of an agreed term gets the lower of that figure and what a wind-up would have paid. The statute doesn’t define fair value there, so write down how you’ll measure it, and see What Is a Roofing Company Worth? Valuation, Buyers and Exit Planning.
A Texas LLC member is paid fair value for leaving only if the company agreement grants a right to withdraw, so as I read it, a co-owner with no buyout clause has no right under the statute to leave and be paid out. An attorney should confirm that.
Commenters on the rep’s thread suggested a deadlock clause that runs from mediation to a buyout, priced by a method agreed in advance, and a plan for the D’s: death, disinterest, disability and divorce. They’re anonymous, so let your attorney decide what fits.
Check whose license the company works under, too. In Florida, a company whose only qualifying agent leaves has 60 days to employ another and can’t contract until it does, unless the state grants a temporary certificate. For your own state, see Roofing License Requirements by State, and How Qualifiers Work.
Life insurance meant to fund a buyout added $889,914 to one estate’s tax bill
In Connelly v. United States (2024), a small building supply company owned by two brothers held $3.5 million of life insurance on each to fund a buyout. When the brother who owned 77.18% died, his estate valued his shares at $3 million. The IRS counted $3 million of the insurance as a company asset, which put his shares at $5.3 million and added $889,914 in estate tax. The Supreme Court unanimously held that the company’s duty to buy back his shares didn’t offset the insurance.
The Court noted that owners insuring each other directly, a cross-purchase agreement, would have avoided this, though each then pays premiums on the other. That was a corporation’s estate-tax case, so ask your CPA whether it reaches a roofing LLC or partnership before you buy a policy to fund a buyout.
If your partner is already skimming, start with the books
In April 2026 a 50/50 co-owner of a roofing company, four years in with seven crew and one office employee, posted on r/smallbusiness under the title “my roofing partner is taking cash jobs off the books.” Reddit removed the rest, so I don’t know the state or how it ended.
A Texas general partner has to account to the partnership for any profit made on its business and can’t compete with it. Any partner can sue for an accounting and has a right to see the books. A Texas LLC’s company agreement can “expand, restrict, or eliminate any duties, including fiduciary duties,” so read that clause before you sign. An LLC member can demand in writing to see company records for a proper purpose, though emails and texts are left out unless they carry out a company action or the agreement says so.
As a last resort, a Texas court can wind up a partnership or LLC when an owner’s conduct “makes it not reasonably practicable to carry on the business with that owner,” and whether skimming meets that test is the court’s call.
Unreported cash is a tax question too. For tax years from 2018 on, the IRS generally assesses and collects underpaid tax at the partnership level, and every partner is bound by what the partnership’s named representative does. A partnership with 100 or fewer partners, all of them eligible types such as individuals or corporations, can elect out on a timely return, so ask your CPA whether yours did and who your representative is.
Take these questions to an attorney before you sign anything together
Get each answer on paper:
- Are we a general partnership or an LLC, and how will we be taxed?
- What does each of us put in, and what is each of us paid for our role?
- Who controls the bank account, and what counts as profit?
- Whose names go on supplier credit, and how much can each of us spend alone?
- How do we break a deadlock, and what is a leaving partner’s share worth, including after a death or disability?
- Whose license does the company work under?
- If a rep or employee gets equity, how does it vest?
If you’re already in business together with nothing written, your state’s defaults cover whatever the two of you never agreed, and in Texas those are the ones above. Ask to see the books, and hold off on personal guarantees until a written agreement says who signs.
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