The end of a business partnership can be as tumultuous as the end of a marriage. As you dissolve your partnership, you must divide the assets that you and your business partner have contributed and acquired in your joint venture.
There are many steps to this complex process.
Review your partnership agreement
Ending your partnership is generally easier if you planned ahead when forming it. An effective partnership agreement should include provisions for the dissolution of the partnership and the division of assets.
The terms of the agreement should guide your next steps, as going against the partnership contract could put you at risk of a costly lawsuit.
Tie up loose ends
If the end of your partnership means the dissolution of the business, you must notify your business contacts, including clients, contractors and vendors, file articles of dissolution and close your tax account.
If your business requires special permits or licenses, such as a liquor license for a restaurant, you should cancel these. You should also make plans to pay outstanding business debts.
Understand your options
If you do not have a partnership agreement in place and can not agree on how to divide business assets, you might pursue a conflict resolution strategy like mediation. If this does not work, or if you suspect a partner is engaging in dishonest behavior, such as concealing assets, it may be necessary to take legal action.
Ending a business partnership can be complicated. Your course of action should depend on the terms of your partnership and the path your business relationship has taken.