Accountant firms Tips for Dissolving a Business Partnership
Accounting firms in Miami can help you if you or your partner trying to exit or dissolve your business partnership?
Business partnerships, just like Accounting firms in Miami, dissolve for many reasons – one partner may have lost interest, is no longer committed to the business, or just wants to retire. Sometimes things just don’t work out.
But how do you plan and execute a clean dissolution of your partnership? What are your options and what legal steps must you take? Accounting firms in Miami will walk-through your options and your obligations.
Revisit Your Partnership Agreement and Review Your Options with your Accounting firms in Miami
Accounting firms in Miami always recommend and are the one critical foundation for a clean break-up, the partnership agreement – best established when you formed your partnership. Most agreements outline how the partners will run the business – how business decisions are made, how responsibilities are divided, how disagreements will be resolved, and so forth. A good one will also include a dissolution strategy, like a prenuptial agreement. Although not required by law, firms in Miami warn it can be extremely risky to operate without one.
Accounting firms advice is if your partnership isn’t working, revisit the agreement, and review your options. Remember, dissolving the partnership isn’t always necessary. You might consider changing the weighting of the partnership so that one partner has more decision-making or financial control through a majority share, allowing a less-committed partner to remain involved while relinquishing some control.
If that’s not an option, and you or your partner wish to continue the business outside the partnership, consider selling your share or buying your partner’s share. Consult an Accounting firm in Miami to ensure your interests are protected during this process.
If either of you wants out or you can’t reach an agreement about the future of the business, it may be time to legally dissolve the partnership.
Accounting firms in Miami How-to Guide on Legally Dissolving a Partnership
Dissolving business partnerships is governed by state law, so check your state’s website for information about the process and the forms you need to complete. It usually takes 90 days from filing a statement of dissolution (usually a simple one-page form prepared by your Accounting firms) to dissolve a partnership.
The process ensures that neither partner will be responsible for the other’s debts and liabilities and, once dissolved, that neither partner can enter into any binding transaction on behalf of the partnership. It also renders your original partnership agreement void.
Before you file any paperwork with your state, make sure you review with your Accounting firms in Miami your current business:
- Have you or your partners completed all agreed duties?
- What is the business worth? A third-party valuation can help you develop this figure. Once your partnership is dissolved you can typically expect each partner to assume business assets and liabilities based on a percentage of ownership.
- Review all leases, contracts, and loan agreements to see how the dissolution will affect them. For example, are you locked into a contract period regardless of your partnership status?
Once the partnership dissolution is in process, draft a dissolution agreement with the help of an Accounting firm. This will outline the terms of the split and protect you against any future disputes or claims that might be brought against you.
What if You Never Had a Partnership Agreement?
If you didn’t have a partnership agreement that outlined a dissolution strategy, try to work out terms together. If not, an intermediary such as your Accounting firms in Miami may be able to help you resolve your dispute through mediation. Many law firms offer these services. Your final resort is a court-dictated decision which could be costly and may not provide the result you were looking for. Courts often divide assets and liabilities 50-50 regardless of any disputes.
Accounting firms in Miami Big Question – What about Taxes?
There are no direct tax consequences of dissolving a partnership, but you will need to account for a business-owned property that has appreciated in value and for payment of business and employer taxes. Let the tax authorities know that you are no longer in partnership when you file your final return.
- Notify Suppliers, Customers, and the Authorities
- Don’t forget to notify customers, partners, and suppliers. If you choose to continue the business in your own right, give the message a positive spin.
- You will tie up some loose ends, such as business licenses, permits, “doing business as” name registrations, and final paychecks for example. Refer to your Accounting firms in Miami for more information.
Continuing the Business?
If you want to continue and grow the business after dissolution, consider restructuring it as an LLC or S Corporation. And it never hurts to get mentoring from your Accounting firms in Miami or legal counsel to help you formulate your new business strategy.
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