It is rare to find a business partner who is selfless. If you are lucky it happens once in a lifetime. – Michael Eisner
It is well said that all business partnerships do not go well for a long time. Due to some or the other problems, be it professional or personal, there can be a difference created among the partners. And in such a case where the relations between the partners have turned sour, or the business is not making profits as it used to, the most opted solution is to consider dissolving the partnership.
Dissolving a Partnership
The need for dissolving a partnership can arise due to several reasons such as court orders, the partnership term coming to an end, the partner dying, or in the case of bankruptcy. In some situations, the dissolution may even happen with a mutual consent among all partners. Dissolving a partnership is not at all an overnight matter. You need to consider some very important things, when it comes to winding up a partnership business. For getting through the process smoothly without any hassles, you may think of taking assistance from a good attorney.
The first step that you need to take is to refer to the business partnership agreement. Doing so will let you know about the fundamentals of the procedure. Get in touch with the state and federal tax authorities and inform them about your decision to get the partnership concern dissolved. Make a list of the creditors and let them know about the same. Also gather all details of the business debts and liabilities of the concern, and try to pay all the pending dues by liquidating the assets of the company.
You will even have to tell your customers and vendors about the dissolution, and clear up the business formalities if any. In case there are assets and finances remaining, they are to be distributed among the partners according to what was mentioned in the contract. Go through all the lease contracts and business loan documents, and make sure, if they do not include certain conditions that are related to the dissolution.
Approach your respective Secretary of State, and make sure if there are any kind of legal conditions to be fulfilled for dissolution. Check if the appropriate state authority has provisions for filing dissolution. If it does, you will have to submit a dissolution and liquidation form and carry out all the prescribed legal formalities.
Take necessary steps for canceling all services, permits, registrations, etc. that are used for the services of the partnership firm. At this point in time, if there are any agreements between the partners which go beyond dissolution, such conditions in the contract should be followed. You may avail the services of a good business lawyer to get all the formalities done.
This was a standard procedure regarding dissolving a partnership. When it comes to legal winding up of a business partnership firm, it is always recommended to take legal guidance from an attorney. In order to prevent problems arising due to financial matters between the members in the partnership firm, it is suggested to get the services of an accountant.