You found the right person(s) to start a business with, you grew the business together, and now, for one reason or another, you or your partner(s) are ready to dissolve the partnership. It happens! However, dissolving a partnership involves a lot more legal maneuvering than just calling it quits one day.
Whatever your reason for dissolving the partnership, you should know how to do it properly and legally. Before you do anything else though, make sure you contact an experienced Florida business attorney to make sure the dissolution is as clean as possible.
1. Did You And Your Partner Have A Partnership Agreement When You Started The Business?
In the most ideal scenario, you and/or your partner had a legally binding partnership agreement drawn up and notarized when you started together. In that partnership agreement, there should be a section that outlines what to do should the partnership dissolve.
Whether you are a fledgling business or a well-established one, if you do not have a partnership agreement in place, you and your partner(s) need to get one right away. If you are dissolving your partnership without an agreement, you can try working it out with your partner first, but in some cases, it might have to go to a mediator or arbitrator.
Fortunately, those who have a partnership agreement that was done correctly won’t have to suffer nearly as much during this process. The initial documents should spell out the way to divvy things up once the business starts to dissolve. That reduces the risk of one party feeling as though they were treated unfairly.
2. Take Care Of Unfinished Business
It’s more difficult to dissolve a partnership if one of the partners hasn’t performed the duties they were supposed to perform. If that’s the case, that partner needs to fulfill their obligations to you and the business before they leave. This can include things like transferring ownership of stocks and property or signing over leases, liabilities, and contracts.
Should there be any sort of unfinished business, then it’s important that everything gets sorted out equitably. Over time, disagreements about what the nature of this business is and who owes what parties what amounts can blossom into far more complicated disputes. As a result, it’s important that businesses that are breaking apart work with skilled attorneys so that nobody who was originally a party to the company’s partnership agreement feels as though something was left undone.
3. Business Valuation
In a partnership, the liabilities and assets of the business are distributed according to the share that the partner has in the business. To get an accurate amount of what’s at stake during the dissolution, you should get the business evaluated by a valuation professional.
Business law can be somewhat complicated, especially for those who aren’t familiar with all of the intricacies of local regulations. Figuring out the exact amount of capital that a business should be valued at can be a difficult process, so you want to ensure that you’re working with legal professionals who have the skills to tackle this task and get everyone a fair deal.
In some cases, the original partnership agreement document would spell out what to do in this sort of circumstance. Unfortunately, this often isn’t the case, which can further complicate matters. Once again, skilled business lawyers who are experienced with working in the local area are the most capable of sorting through these types of disagreements.
4. File A Form Of Dissolution With The Florida Division Of Corporations
Have an attorney help you fill out and file this form, as any mistakes or discrepancies may cause a delay and additional costs if not done properly the first time. By filing it correctly the first time, though, you can be sure that you’ll meet any deadlines that are required for the dissolution of the partnership. Considering that many individuals have found this process somewhat uncomfortable, it’s also a good idea to get this form early with professional assistance. By doing so, you’re making sure that you won’t have to deal with anything at a later date.
Representatives of the Florida Division of Corporations manage all of the various comings and goings of businesses that operate within the state. That’s why it’s important to make sure that you have a form on file with this organization. If you don’t, then the chances are good that you’re just going to have to manage this paperwork later on anyway.
5. Remember That There Are Other Options To Dissolving The Partnership
If you have more than one partner, consider giving another partner (or yourself) the share of the company. If the case goes to court, know that courts are known to divide assets and liabilities 50-50, which could be unfair to you. Speak with an attorney to get more ideas on how you can avoid a complete dissolution if possible.
Depending on how things work out, it might also be possible to simply renegotiate the business plan and the division of labor that stipulates what parties are expected to handle certain responsibilities. That increases the chances that an individual business might stay incorporated longer.
It’s true that many companies ultimately end up failing and few people are able to muster the wherewithal that’s needed to remain together. However, working with an attorney can help you find certain alternatives to increase the odds that you can hold on to everything that you might have built so far.
Dissolving a partnership doesn’t necessarily mean that it’s the end of the business. If you want to keep going with the business without your partner, you can restructure the business as an LLC or a sole proprietorship. The main takeaway you should get from this blog though is that you do have options available to you and dissolution of the partnership is not necessarily the end of the road if you don’t want it to be.
Dissolve A Florida Partnership With Trembly Law’s Legal Advice
The team at the Trembly Law Firm is ready to guide you through the dissolution process. Our attorneys will sift through the relevant information to navigate business laws that apply to your remaining assets or partnership.
Let Trembly Law help. Contact us online whenever you’re ready to learn more about the least painful way to get through this often uncomfortable procedure. Dissolving a partnership can be difficult, but you have attorneys on your side willing to assist.