How to Close a Business Partnership
There can be any number of reasons to end a business partnership. Money problems, poor business or simply no longer getting along with your partner may lead to the partnership dissolving. When that time comes, you must do more than simply closing the business down.
Many things need to be addressed, and resolved, to close a business partnership.
Hire a lawyer. Each partner should have his own lawyer. There are many legalities to consider when closing a business partnership, and having a lawyer is essential.
Obtain an outside firm to determine the value of the business. It's best to use the services of an outsider for a true and accurate valuation, especially if the ending of the partnership is less than amicable.
Ensure that all state taxes have been paid. Clearance from your state tax board may be required, depending on the state where your business operates. Check with your secretary of state office for the laws regarding closing a business partnership in your state.
Cancel any and all state licenses and permits pertaining to the business, if applicable. It's best not to allow any other parties to continue to operate the business under your name.
Contact all creditors concerning the closing of a business partnership. Make sure you've paid all final bills and that you owe no debts before the business is closed.
Determine all monetary contributions made by each partner. Each partner should be repaid any such contributions. Property and any equipment purchased as a business should be divided equally among all partners.
- Create a written partnership agreement from the beginning that includes a detailed section about how to close the business partnership.
- Use a mediator, if necessary. Quite often, some things may take time to work out and be agreed upon, even if closing the business partnership is amicable. A professional mediator can be impartial and help reach an agreement more quickly than if partners try to work out all details between themselves.
- Report to the IRS and file all necessary documentation concerning the closing of a business partnership.