Here are some guidelines on how to dissolve a business partnership without major losses. Most businesses come to an end at some point in time. Whether you planned on ending the partnership or it has become necessary, everyone wants to ensure that the partnership concludes with no major losses. There are some important legal steps that must be taken to dissolve a business partnership in Arizona. It is important that you plan the end of your business just as you planned the start. The better planned the dissolution, the better the chances of a satisfactory outcome.
Review the Business Partnership Agreement
If you haven’t already done so, now is the time to evaluate the business partnership agreement that is in place. Communicate with your partner(s) about the dissolution. Address how the business will end, including the payment of debts as well as how assets will be divided. Your agreement may contain details about how to dissolve the partnership, which will make it easier. If not, a plan will need to be put into place regarding how these issues will be handled. This agreement should be made in writing to avoid disagreements later.
File a Dissolution Form
It is not a legal requirement to file a partnership dissolution form, but it makes good business sense. In order to prevent future problems from occurring, the partnership should be dissolved with a Statement of Dissolution. There are some specific conditions that must be met in order to file the form. These should be discussed with a qualified business attorney before submitting. Your attorney will also assist by providing you with information and guidance regarding how to handle debts and asset distribution.
Debts and Assets
Every business has both debts and assets. These must be examined and a determination made as to how to take care of them in order to close the business. You must take into consideration any current work that must be completed before dissolution. Once it is decided that the business will be dissolved, it is necessary to eliminate further purchases. Creditors must be notified that your business is ending. If partners agree, assets should be sold and money used for debts or to be distributed. It is important to remember that all debts are required to be paid before any remaining assets can be distributed.
It is best to protect yourself as a business partnership dissolves. The process can have some serious considerations that could have legal and financial ramifications both now and in the future. For these reasons, it is a good idea to seek professional assistance with the dissolution from an experienced business attorney as soon as possible.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Dissolve a Business Partnership, or any other litigation issues, please feel free to contact us at 480.461.5300, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.