When it is about dissolving your Business partnership, it must be done thoroughly and accurately so that you get free from the obligations under the partnership agreement. No matter what type of business partnership you are involved in and what may be the reason for getting out of it, everything should be done legally.
When you start a business partnership, you will easily get molded into new business possibilities. But, there may be a chance when the association may not work out the way you had looked before.
So, always remember that dissolving a partnership agreement may not be as easy as you think.
You may want to get out of a business partnership because you may retire or become bankrupt. However, there may also be a reason you and your partners meet the specific goals of building a partnership, and now you no longer need a partnership.
Entering into a business partnership indeed comes with several risks. If you and your partners cannot handle these risks correctly, it may result in the dissolution of a partnership and lead to a potential lawsuit.
The process of business partnership dissolution.
You must know that ending your business partnership is not as easy as closing up shop.
Try to avoid making it overly complicated. For example, if your partnership dissolves, you are no longer a partner legally. Still, the partnership continues until the business’s debts are resolved, and the rest of the company’s assets have been distributed.
You need to follow these five steps to get out of your business partnership legally.
Review your partnership agreement
You must review the business partnership agreement to ensure that you follow the protocol mentioned in the legal agreement.
Discuss your thought with your partner(s)
You have started the business with your partner(s), so you must also discuss your decision to get out of the partnership.
In addition, you must discuss the business’s debts and future liabilities with your partner(s).
File a dissolution form
You must file a dissolution form with the state where your business locates.
It is required to announce the end of your business partnership formally. You must take this step as a reasonable protective measure.
Notify others
You must also notify others about the dissolution of the partnership, including employees, creditors, customers, a landlord, and government entities involved in registering or issuing a license.
Close all business accounts
You must close all business bank accounts and distribute all assets per your partnership with your partners.
You can take legal advice from a business lawyer if there are insufficient funds to pay partnership debts and liabilities.
