How to dissolve a business partnership

Written by shannon steen-larsen
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Many people start businesses as a partnership because they are afraid to start out on their own. They feel safer having someone by their side, sharing both the profits and responsibilities of the business. However, not all partnerships last. Here are some steps to dissolving your business partnership.

Skill level:

Things you need

  • Business partner
  • Business
  • Business attorney

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  1. 1

    Analyse why you want to dissolve the partnership. Perhaps you and your business partner don’t get along or you have different end goals at this point in the business. Perhaps one of the partners wants to retire and no longer has the energy or desire to work on the business. You have to look at your assets, customers, inventory, and anything else that is shared in the business. Sometimes it just doesn’t make sense to dissolve the business. Be sure you analyse the situation before attempting to dissolve the business. It is a lengthy and expensive process. Remember: both partners must agree to dissolve the business.

  2. 2

    Get information on dissolving your business. Go to your state’s government website and look for information on businesses. They should have a form for dissolving a business partnership. Print out the form, fill it out, have both partners sign it. A business can dissolve completely or dissolve and become a corporation or llc.

  3. 3

    Once the business is dissolved, you need to file a statement of dissolution, which lets third parties know that neither partner has any rights to enter into binding transactions unless it’s to wrap up the business. It is usually assumed that all third parties know of the dissolution after ninety days of filing the statement of dissolution.

  4. 4

    Notify the people you do business with. Be sure to send out a nice letter or card letting people know about your business dissolution. You can send them to your customers, clients and suppliers. Usually, the partner who initiated the dissolution is responsible for announcing it. If you are dissolving the business and starting a new company, be sure to include the information in the notice, including the new company name and contact information.

  5. 5

    Examine leases, contracts and loan agreements before dissolving the business. You want to make sure that there will be no legal issues if the business is dissolved. You don’t want someone filing a lawsuit against you and your partner because you didn’t follow the agreement. Don’t neglect to learn if the dissolution of the partnership will affect those agreements.

  6. 6

    Get a business attorney. You may want a business attorney to help you through the process, especially if your business has grown significantly or if you could be facing liability issues. A business lawyer will help you through the process.

Tips and warnings

  • Get a business attorney to help you through the process of dissolving your business partnership. He can make the process much easier, but remember that it will cost you money.
  • Make sure you examine leases, contracts,and loan agreements before dissolving the business. You don’t want to end up in a lawsuit because you didn’t follow dissolution procedures!

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