Ending a business partnership can be incredibly difficult, especially if you started a business with a friend or family member. During such a trying and emotional time, it is especially important to ensure that you are crossing your Ts and dotting you Is.
How to End Your Business Partnership
Dissolving a business partnership is governed by state law, so you should check your state’s website for information about their exact process and which forms you’ll need to fill out. It commonly takes 90 days from filing a statement of dissolution to the actual dissolving of the partnership. The purpose of the forms is to make sure that neither party is saddled with the debts or responsibilities of the other party.
If you didn’t have an agreement with your business partner, try to work one out for yourself. If that doesn’t work, then finding a moderator would be a great idea.
No taxes are required to specifically end a business partnership, but account for business-owned property that has appreciated in value and for payment of business and employer taxes.
To learn more about the nitty-gritty of the process, click here.
- Be sure to get everything in writing, and don’t be afraid to lean on your contract. You want things to be official, and you don’t want to get stuck without a deal. If this happens, you’ll have to do a lot more work.
- In general, be kind and generous, yet as reasonable as possible. Most importantly, keep your emotions out of it! You and/or your former business partner are likely emotional at this point, and it is important that you don’t let your feelings (whether remorse or hatred) to cloud your judgment or get in the way of doing the right thing.
- Define what your mutually desired outcomes are, and try to reach a happy compromise.
- Hire an attorney! Even if you feel like you know what you are doing, consider hiring an attorney that specializes in business partnership dissolution just to be sure that you are doing everything right.