Originally Posted by AlohaMowing
This is something you need to be careful about. As long as you remain partners you cannot do anything that could harm your partner. You still have a fiduciary duty to one another.
Even though you have no documentation of the partnership up to this point, it would be a good idea to put together a memo to your partner outlining what the two of you agreed to regarding the dissolution of the partnership. In particular, cover the date the partnership dissolves, the disposition of the various pieces of equipment, and, perhaps most importantly, the division of the accounts. Give him a couple weeks to respond if he disagrees with your memo, if he does not dispute it you may infer that he accepts the terms.
Then, you can contact the accounts in the area that you are getting and let them know that you are forming the new company to handle them, and hope that you will have their business next year. (And speaking of the new company you will form, let me make a plug that you form an LLC unless you have a specific reason for a different form of business.) After the first of the year, after the partnership has been dissolved, there will be no reason you could not contact those accounts in your partner's area to let them know of your new company (unless the two of you have a specific agreement to keep your hands off one another's accounts, which agreement sounds unlikely from your description of your discussion). Since he still is a friend you probably do not want to be aggressive in poaching his accounts, but it sounds like he is likely to piss off his customers, and when his customers fire him, there is no reason you should not be the guy to get their business.
Since we will be splitting the customer base, I dont want to get complaints from the area that he is getting (even though I am the one currently doing all of the admin work) if I am not servicing them. That would then become his responsibility to take care of that. That area is almost a half hour 45 minute drive to the first loc. I dont find it very profitable and more like a waste of time (he likes that area). I dont like the windshield time. Thats another issue that I had with him. To each his own I guess. The area that I will have is more like 2-4 miles at most from my home.