How to Dissolve a Business Partnership

No matter how strong your personal relationship is with your business partner, your professional relationship can still be susceptible to conflicts. These disagreements are usually settled easily by way of proper communication, but there might come a point where you’re both unable to resolve your differences and these tensions may negatively affect the business operations. In this case, it may be in both of your best interests to dissolve the business partnership. This situation is quite a common occurrence in the world of business. As unfortunate as they are, oftentimes they’re necessary.

If you and your business partner choose to dissolve your business partnership, here are the essential steps you have to take.

Speak with your lawyer

Dissolving your partnership is a complicated process, so you’ll need to speak with a commercial lawyer so that they can help you properly navigate all the necessary requirements and procedures.

Go over your partnership agreement

A partnership agreement is a formal or written agreement that details the structure of your relationship with your business partner. Among the many items outlined in this document are the guidelines and protocols to follow in the event that either of you decides to dissolve the partnership. If you don’t have a partnership agreement in place, you’ll only need to give your partner notice of your express will to leave the partnership.

Take stock of property

Perform an inventory check on any real estate or personal property that either you or your partner have loaned to the partnership. The ownership of the property is usually delineated in your partnership agreement. If you don’t have one, you’ll have to discuss the issue with your partner. You can also refer to documentation and receipts as proof of who has the right to ownership.

Meet with the rest of your partners

If you have other partners in the business, you have to keep them updated about the changes that are happening. Set up meetings with the rest of your partners to discuss the future of your business relations going forward.

Split your assets

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Your business assets include intellectual property, equipment, social media accounts, and digital assets, among many other items. You’ll need to convene with your partner and discuss how to divide these assets appropriately. You also have to settle any debts or decide who will shoulder these obligations. If you and your partner are having difficulty reaching an agreement, you can consider mediation to help you quickly reach a resolution that satisfies all parties without any difficulty.

File the necessary documentation

To formalize your dissolution, you and your partner will have to file a certificate of dissolution with the state. You’ll also need to file tax forms with the IRS and provide the necessary documentation and requirements to formalize the dissolution with them, as well.

Distribute property and close accounts

Once you’ve put your partnership dissolution into formal writing, it’s time to distribute your respective assets and property to the appropriate owners. The last thing you have to attend to is the closing of all joint bank accounts. Afterward, you and your partner will have successfully dissolved your partnership.

Deciding to dissolve a business partnership, just like any professional relationship, can be difficult. Taking these necessary steps will ensure that you’ll have a much easier time getting it done.