Whether your business partnership was a success or failure, you are ready to leave the venture behind. Before you do, though, you must be sure you wrap up the partnership. After all, if you fail to dissolve the venture formally, you, your partners or the partnership may continue to have legal liability.
While your business partnership may require additional ones, dissolving a partnership usually requires five broad steps.
1. Consult your partnership agreement
Your partnership agreement outlines the rights and responsibilities of each partner. It also likely has a procedure for dissolving the venture. Even if you are just thinking about ending the business, understanding the agreement’s framework is essential.
2. Talk to your business partners
Even though your partnership agreement likely includes a provision for dissolving the partnership, you need your partners’ cooperation. When you are ready to be done with the venture, talk to your business partners. This conversation may help you clarify important matters and come up with a practical way to dissolve the partnership.
3. File a formal request
Once you and your partners are on the same page, you should notify the state of your partnership’s dissolution. To do so, simply file the appropriate form with the secretary of state. This creates a formal record of the end of your business venture.
4. Notify interested parties
Your business partnership may have employees, contractors, suppliers and others who have an interest in knowing about the end of the partnership. When you are ready to close your venture, notify these individuals or organizations in writing.
5. Settle remaining accounts
You do not want your wrapped-up partnership to have open accounts or unsettled debts. Therefore, you should notify creditors of the pending closure and ask for final statements. Furthermore, you should close business accounts and distribute remaining assets according to the terms of your partnership agreement.
When you have settled all remaining business accounts, you are likely finished wrapping up your partnership. Nevertheless, if you have remaining matters after ending the venture, you should be sure to address them before calling it quits.