Dissolving your business partnership can occur for any number of reasons –perhaps the partners have simply concluded that the business has run its course or that it’s high time the various partners went their own way, or alternatively, in the absence of a formal and written partnership agreement, one partner wants to opt out or the remaining partners have decided they need to remove one or more partners from the partnership.
Business partnership dissolution also takes place automatically when one of partners passes on, or, in the absence of a written partnership agreement, goes bankrupt.
Don’t forget that even in the absence of a written partnership agreement – coming together to do business means of a partnership is automatically formed – and is ruled by the provisions of the Partnership Act.
When dissolving your business partnership, here’s a handy checklist of some of the issues you will need to think about;
- How are the partnerships assets going to be shared out between the partners?
- What is going to happen to the value of existing Work in Progress is – which in some service industries such as law firms, can often be the most valuable assets
- Who will retain responsible the for any partnership is liabilities?
- What will happen to any employees – in particular if they’re not to move on is to new business in one or more the partners, who is going to be responsible for their redundancy pay
- What happens to customer’s crucial marketing information and lists?
- The name – who can continue to use it?
- Who is going to be responsible for sorting out all the little odds and ends and outstanding matters that inevitably continue to emerge after being any partnership has been dissolved?
- Who should be responsible for arranging for final accounts?
- What’s going to happen to office records?
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