Having one or more partners in a business is a great way to distribute the workload, share costs, and bring in a diverse set of skills. There are times, however, when it becomes necessary to end the partnership agreement and have everyone go their own way. Whether this is done while closing the business, selling the business, or just having one or more of the parties exit the business, it is critical that it is done properly. Any mistakes at this stage can cause further problems down the road.
Check the Partnership Agreement
In Florida, partnership agreements are not required in order to do business as a partnership. They are, however, highly recommended, and this situation is just one reason why. If you have a partnership agreement in place, it should include provisions regarding the process of business dissolution. The agreement will likely say that all outstanding partnership debts need to be paid, and any assets need to be divided (or bought out) in order to dissolve the agreement.
Vote to Dissolve
Even if there isn’t a partnership agreement in place, you can still gather the owners together and vote to dissolve the business. If the partners all agree on how the dissolution should take place, then simply writing the details up in a contract and having it signed by all partners will be sufficient. If there is conflict, then you must follow the guidelines in the Revised Uniform Partnership Act.
Notify All Impacted Parties
If you are closing the business, it is a good idea to notify all the impacted parties. This would include creditors, customers, clients, suppliers, employees, and others. If you’re going to continue operating the business, but without one or more of the original partners, it is still prudent to let people know. For example, you will want to make sure clients, customers, suppliers, and employees are aware of the change in management. This will prevent them from using outdated contact information or entrusting confidential information or monies to those who are no longer part of the business.
Take Care of Taxes
Dissolving a partnership will often result in a variety of tax implications. Whether you are continuing to operate the business or not, you need to be certain that all necessary taxes have been paid so that it doesn’t come back to haunt you down the road. Remember to include both state and federal taxes, and in some Florida cities, local taxes as well. If your business operates in multiple states, you may also have to take some steps to have everything dissolved in each state.
Get the Help You Need
Dissolving a partnership is a complicated task that needs to be handled correctly from beginning to end. Having an attorney work with you will help avoid any problems and ensure the entire process goes smoothly. Please contact Cove Law to set up a consultation and get your partnership dissolved correctly.
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