Business partnerships are often an asset and can be mutually beneficial. However, sometimes these partnerships can fade and stop working. In this case, it may work better for the partnership to dissolve.
There are a few elements the partners will need to review and complete in order to properly dissolve a partnership.
Review all previous agreements
The first step is to review the partnership agreement, in some cases there may be a dissolution strategy outlined that each party should follow. Reviewing previous agreements also ensures that neither partner is violating any preexisting commitments to the company. Reviewing the agreement will also verify that all contracts, leases and loan agreements are in order.
If there is not an existing partnership agreement, each party will have to work together to determine the terms of dissolution. It may help to hire outside mediation to assist in this process.
Check state laws
Business partnerships are governed by states. In Florida, partnerships are not obligated to file upon dissolution, though it will help to file a Statement of Dissolution with the Division of Corporations in the Florida Department of State.
Florida law also requires that all debts be paid before making distributions to any partners if the business is dissolving. The Florida Partnership Act dictates the order in which entities are paid when a partnership dissolves.
Draft a dissolution agreement
Businesses will then want to draft a dissolution agreement. Consultation from a lawyer may help with this process. The dissolution agreement will outline the terms of the separation.
The process for dissolving a partnership is fairly straightforward. Be sure all proceedings are legal and in line with the business’ prior agreements.