When a business partnership reaches the end of the road, it is not always easy to know how to part ways fairly with finality. Sometimes, this is because partnerships are very simple to establish legally and in some cases do not even require a written partnership agreement of any kind to exist. In other cases, partners may have disagreements about how to resolve outstanding accounts or fairly divide the partnership’s leftover assets.
If you face the task of ending a partnership, you want to make sure that you perform the due diligence necessary to protect yourself from future complications. Just as in divorce, you don’t want any lingering attachments between you and your partner. That way, each of you is free to make a clean break and start fresh.
It is always wise to begin by consulting your partnership agreement, if you have one. If you worry that the language in the agreement leaves too much room for interpretation, make it a priority to understand what the law has to say about these issues and establish a strong legal strategy to back up your interpretation of the agreement.
You and your partner should ideally reach consensus on the terms of ending the partnership, but this process may get complicated if the business itself has outstanding debt.
Before you can officially dissolve the business, you must address outstanding accounts and should file an official notice with the state to ensure that you do not continue to incur tax obligations or create other issues for yourself. It is also wise to alert your customers, clients, suppliers and any other parties that you regularly do business with so that they can alter their own plans accordingly.
In theory, dissolving a partnership is simple, but there are many ways it can run off the rails. Don’t hesitate to use all the available resources and guidance to make sure that you protect your own interests and give yourself a strong position for moving forward to your next opportunity.