Ending a partnership business is an overwhelming process. If your partnership firm is not working out as planned, you should consider formally dissolving the partnership. Doing so will ensure that you’re no longer liable for partnership debts. Besides this, it will also make sure that your business partner can’t bind you in any business deal without your knowledge. Most, if not all, partnership businesses end due to internal disputes or conflicts. If this is the case with you, you should consider hiring a business dispute lawyer Virginia Beach who can represent your case and protect your interests.
Here are a few tips for dissolving a partnership firm and end your liability.
Vote to Dissolve
The first step to dissolving a partnership starts with a vote. Just like how all the partners are required to agree to form a partnership, similarly, all partners should agree to end the partnership. After voting, the decision should be documented and recorded in writing.
Discuss How to Handle Partnership Debts
Once all the partners have agreed to dissolve the partnership, the next step is to discuss which partner will bear what debts and future liabilities. Suppose a person has paid his share of debts, but his partner has filed for insolvency. In that case, the person can still be held liable for the rest of the debts.
Suppose your business has gone insolvent and you don’t have enough money to pay off liabilities and debts. In that case, you should immediately consult a partnership dispute lawyer Virginia Beach to protect your interests and rights.
Ensure to prepare a written document of the agreements regarding the decisions of handling the liabilities. Failing to document the agreement in writing can make one partner entirely liable for the partnership debts.
File a Dissolution Form
For additional proof that the partnership has dissolved, one should also fill and submit the dissolution of partnership form. Each state has its own dissolution of partnership form. One can download the dissolution of partnership form from the website of the state’s secretary of state or corporations division. If you didn’t file paperwork with your state when forming your partnership form, it’s not legally mandatory to file a dissolution form. However, it’s best to do so as it makes it clear that a person is no longer associated with a business as a partner and thus not liable for any debts associated with that business.
Publish a Notice of the Partnership’s Termination
After you have filed the partnership dissolution form with your state, your next step should be putting it out in the newspaper. Publish a note in the newspaper stating that your partnership has ended and you are no longer liable for present or future debts. Newspaper notice is also a great way to inform the creditors that they can’t incur debts any longer. This also prevents a partner from binding the business to a deal without informing the remaining partners.
Besides these technical steps of closing down a partnership business, other measures can help you prevent uncertain future liabilities. For instance, notify your creditors about the dissolution of business, liquidate and distribute assets, negotiate partnership debts with creditors, etc. …