Business partnerships form for many different reasons, and likewise they end for many different reasons. Some partnerships have a planned ending while others start off with the hope that they’ll continue forever. No matter whether your situation puts you at one of these two positions or somewhere in between ending a business partnership is an action whose boundaries are legally dictated, and therefore is best overseen with the assistance of an attorney.
In the simplest situations, the end of a business partnership has already been addressed within a written partnership agreement at the start of the collaboration. When a partnership has been established with this type of foresight, all of the required actions will already have been agreed to. Unfortunately, many do not anticipate or prepare properly. When that is the case, you have a choice of coming to terms on your own or allowing your state laws to dictate what happens.
Generally speaking, state law requires that a business partnership be ended when a partner dies, resigns or withdraws, becomes mentally or physically incapacitated, or retires. A partnership is also ended when a court orders it terminated because it can’t accomplish its original purpose, a partner is expelled, the partnership business files for bankruptcy, there is an agreement to dissolve the partnership or the business is deemed illegal.
Whatever the reason for a partnership to be dissolved, there are a few ways to accomplish the dissolution. Buyout agreements are the easiest way to go but are not always possible. No matter what, partnership agreements don’t just go away because of the desire or intent to do so. The partnership exists until the dissolution is resolved, whether that means selling assets, paying off debts, distributing property, or any of the other details that need to be addressed. It also continues to exist for tax purposes until it has been fully dissolved. Going through the process may sound easy, but it isn’t – it involves a full accounting, as well as publishing a notice of the partnership’s dissolution so that creditors can be aware of what’s happened. A statement of dissolution form also needs to be filed with appropriate state officials.
To make sure that your business partnership has been ended in a way that protects all parties, you need to put yourself in the hands of an experienced business attorney. Contact our office today to set up a time to discuss your situation.