Dissolving a Business Partnership

PlanningWhen you were starting your business, it seemed the most natural and easiest thing in the world to have a partner. You couldn’t start the company alone, after all, and having a partner meant having additional expertise, experience, and someone with whom you could “shop” ideas. “Business partnerships dissolve for many reasons,” according to the Small Business Administration (SBA), “one partner may have lost interest, is no longer committed to the business or just wants to retire. Sometimes things just don’t work out,” states the SBA. If you are interested in dissolving your business partnership, however, there are some necessary steps that must be undertaken to ensure the legality of the proceedings. This, of course, ensures that you don’t get slapped with a lawsuit or a fine, years down the road.

The critical foundation for a clean partnership dissolution, according to the SBA, is a partnership agreement. This, of course, is “best established when you formed your business.” If you own a business with someone else—even if that partner is your spouse—and you don’t have a partnership agreement, it’s imperative to create one as soon as possible. “Most agreements outline how the partners will run the business… although not required by law, it can be extremely risky to operate without one,” according to the SBA.

Seeking the counsel of a qualified business attorney is the most important first step if you’re interested in dissolving your business partnership. In most cases, it takes about 90 days to dissolve a business partnership from the time you begin the proceedings to when the other name is officially removed from state records. “Before you file any paperwork with your state,” the SBA recommends, “make sure you review your current business.” A review session will include examination of whether you and your partners have completed all agreed duties, determining what the business is worth, and a review of all contracts (including loans and leases). A business attorney can help you ensure that you’re ready to file the paperwork, and help you prepare it for filing.

If you or someone you know is considering dissolving a business partnership don’t go through it alone. Contact an experienced lawyer at The Gierach Law Firm in Illinois today.