While not complicated, dissolving a business partnership is a specific process. Failure to take the proper steps can result in unwanted consequences and extended liability for the involved parties. The key goal for the involved parties should be to resolve any potential issues quickly with a minimal amount of ambiguity.
Decide to Dissolve
It is important that all parties involved formally declare their intentions to dissolve the partnership. This prevents confusion or any misunderstandings regarding the situation. It also prevents malicious actions from one party or the other during the process.
Debt and Asset Resolution
Depending on the nature of the original partnership agreement both parties will have varying levels of liability for debts accrued by the partnership. The same is true with regards to asset ownership. It is important to remember that without a formal written agreement both parties are often times still fully liable for outstanding debt. Verbal agreements are difficult to enforce and often unintentionally ambiguous. It is beneficial to seek legal counsel under any circumstance but especially so if the partnership’s debt outweighs its existing assets.
File a Dissolution Form
Each individual state has its own forms and procedures regarding forming and dissolving a partnership. While not every state requires formal paperwork be filed to dissolve a partnership it is still a good idea. For starters, the paperwork is often simple and easily found on a variety of websites. Additionally, though not legally required, it still provides each member of the partnership with an added level of protection against future liability.
Again, this is not a legally requires step. However, much like the dissolution form, it is low cost action with a potentially high return on investment. Filing a public notice in a local newspaper informs all relevant parties that the partnership is no longer considered in business. This lets creditors, customers, or other financial institutions know that neither party should be incurring debts on behalf of the partnership.
Unfortunately, some relationships do end. However, that does not mean that they have to end poorly. These are merely the basic level of protections that each side of a partnership should take to ensure the split begins and ends amicably. Additionally, this is not intended as a comprehensive list. As with any legal matter, formal advice is the only way to ensure that every aspect of the situation is fully covered.
Contact one of our dedicated attorneys at 405-232-7980 or online today.