Setting off on a business venture with a partner can be an exciting, thrilling experience. You have someone there with you to celebrate the ups and someone to commiserate with you when you hit the lows.
However, people’s desires and wants change over time, and someday you may get to a point where your partnership no longer serves the best interest of either involved party. What happens when you reach that crossroad?
Follow your outlined procedures
Chron discusses the dissolution of business partnerships. It is important to note that if you established your business as a partnership and one partner wishes to leave, you will likely need to either dissolve the business or transfer it to a sole proprietorship.
This is where your original partnership agreement comes in handy. Hopefully, you addressed a potential scenario in which you need or wish to dissolve the partnership or have a partner withdraw. You can follow any procedures outlined there if you thought ahead.
Follow state requirements
To entirely dissolve a partnership, you must notify proper outside parties and follow the guidelines listed for proper termination. Some steps may include handling outstanding debts, filing any necessary tax returns, paying applicable taxes and filing a certificate of dissolution with the Secretary of State. You should also allocate any of your remaining assets to any remaining partners.
Terminating a partnership is often a complex, lengthy process, so you might also benefit from having some legal help and guidance along the way. This ensures that you do everything right the first time and do not waste valuable time going back over the same steps again and again.