Dissolving a general (legal) partnership has to do with alerting customers and business associates that you and your partner are
| ending your business relationship. Each partner will then no longer be responsible for debts and liabilities of the other(s). A general partnership can be dissolved by any of the partners at any time. There are no legal requirements that the other partners agree to this beforehand or that notification be |
given to said partners. The partner initiating the dissolution is usually the one who notifies customers, clients and creditors.
A partnership is automatically dissolved if one of the partners dies, one of the partners files for bankruptcy, or if circumstances arise which make the partnership’s continuation illegal. A partnership may also be ended once a specific task or event is completed.
In order to legally dissolve your partnership you must:
1. Notify the state and federal tax authorities.
2. Complete and submit a Dissolution and Liquidation form to the state in which you do business. This may not be required in your state specifically, but it is a good idea nonetheless.
3. Notify all creditors.
4. Notify suppliers, customers, clients, and anyone else who does business with your partnership of the dissolution.
For the notifications and submissions of forms, be
| sure to use registered mail and return receipt or other verifiable forms of mailing so you will have a record of delivery. A quick follow-up that everything has been received and accepted is a good idea. Keep copies of everything sent, anything received, and nything which confirms your actions such as receipts and statements from creditors. |
The services of a business attorney are not implicitly necessary but if you have any questions or concerns regarding the filing of papers, notifications, or consequences, it’s best to seek legal advice before any steps are taken. Clarification and correct filing of all documents will save time later if there are unforeseen complications.
Additional Resources and Further Reading
‘Cutting the Partnership Knot’ from Business Week