What Steps Should Be Taken When Dissolving a Partnership?
Ending a business partnership in Florida involves multiple steps and it is important that you do them correctly. Below are a few steps that you need to consider if the partnership dissolution was voluntary and a mutual decision of the partners.
- Review the Partnership Agreement – Just like all matters affecting a partnership, it is important to check your partnership agreement when dissolving the partnership. Although a written agreement is not required in Florida, you and your partner would ideally have such an agreement made when the partnership was initially formed. This agreement will spell out how debts and assets will be divided when the partnership is dissolved.
- Take Action or Vote to Dissolve the Partnership – If you have a written partnership agreement, you should follow the provisions written within. Most agreements will state that the majority or all of the partners involved must consent to the dissolution of the partnership. This means you should take a vote and record the results of the vote. If you are wanting to dissolve the partnership and not all partners are in agreement, you have a couple different options. Often, a written partnership agreement will provide a solution to this situation, or you may be able to bring in a mediator to resolve the disagreements. However, if the partners cannot reach an agreement, you may have to go to court to resolve the partnership.
- Distribute Assets and Pay Debts – If you dissolved the partnership using the agreement, there are additional steps that you must take. You must complete all work in process, sell some or all of the assets that the partners have agreed to, pay debts, and distribute assets to the partners. It is vital that all debts are paid before distributing any assets to the partners.
- Notify Customers, Suppliers, and Creditors – Although this isn’t a legal requirement, it is important to notify your creditors, suppliers, and customers that you are dissolving your partnership. This can be done by writing letters or publishing a notice in a local newspaper.
- Resolve Tax Issues – You are not required by Florida law to obtain a tax clearance before you dissolve your partnership. However, it is required that you notify the Department of Revenue that your business is closing.
- Out of State Registration – If your partnership is eligible to do business in other states, you must file the appropriate forms to terminate your registration in those states as well as in Florida. Failing to file such forms means that you will still be liable for reporting any annual fees and taxes in those states.
Contact an Experienced Florida Business Planning Attorney
Although it is possible to dissolve your partnership without the assistance of an attorney if all the partners are in agreement with the dissolution, it isn’t advisable to do so. Just like when you are forming your partnership in the beginning, it is important to be sure that it is done legally and professionally. To ensure that you are taking all the steps necessary, it is important that you consult with a business planning attorney. Tampa attorney David Toback has years of experience helping his clients form and dissolve their businesses and he can help you too. Contact him today to schedule a consultation.