Dissolving a Partnership, Part 1
All kinds of business-related areas saturate financial news, especially stocks and bonds. However, many novel investors start out by investing in projects involving real estate or small business-start ups. These same investors typically choose to fund their new projects or small business start-ups with family members or close personal acquaintances - thus, forming a partnership. Partnerships usually start off well, everyone being optimistic about the future or the new project or business. A harsh reality is that business partnerships can dissolve for a variety of reasons - including, but not limited to, a falling out between the partners to a change in circumstances for one partner that prohibits him/her from further working with the partnership. Whatever the reason, the outcome is inevitable - the partnership must be dissolved. Dissolving a partnership brings about major changes to the the business structure and to the personal lives of the partners. If faced with dissolving a partnership, certain steps should be taken as early as possible to ensure a smooth transition.
1. Any licenses, permits and certifications there were received in the names of both partners names (or multiple partners) should be canceled.
2. Remove the exiting partner from any joint bank accounts that pertain to the business
3. Notify the IRS and creditors of the split. Also, ensure that all taxes and debts of the business are paid timely regardless if the business survives the dissolution or the partnership.
4. Consult with a Business Attorney in your local area and/or state to ensure there are no legal ramifications for dissolving the Partnership.
Contacting a Business Attorney is critical if considering dissolving a partnership. An attorney is extremely helpful in dissolving a partnership for several reasons. For example, your business may be operating under a certain name and will not continue to operated under that same name after the partnership is dissolved. If you anticipate a possible name change for your business, certain paperwork needs to be filed to the county clerk's office - an attorney in your area will know exactly what paperwork needs to be filed and will do so timely. Also, if a partner is being bought out by other partners, an attorney can draft a contract specifying what are being purchased. If considering dissolving a partnership contact Wood, Atter & Wolf, P.A., to consult with an experienced Business Attorney.
