Not all business partnerships last forever. A partner moves away or retires. Business objectives diverge. Partners no longer get along. Economics may also intervene, making it no longer feasible to support multiple partners. No matter what the reason is for your business breakup, protecting your interests throughout the dissolution is critical.
Ideally, when you started the business, you created an agreement that included a dissolution strategy. Without one in place, your “divorce” can be acrimonious. Having each stakeholder represented by individual counsel can keep the negotiations professional.
The process begins with a thorough review of the business to:
- Ascertain that all agreed upon duties have been completed
- Tabulate the business assets and liabilities
- Review all leases, contracts and loan agreements
- Determine property, business and employer tax liabilities
- Depending on the nature of your business, review ownership of intellectual property
With this information, you are prepared to negotiate the terms of separation with your partner. A thorough and well-managed process protects you from responsibility for your partner’s debts and liabilities. You are safeguarded against any future disputes or claims.
A knowledgeable business law attorney documents any agreements that have been negotiated and the related purchase or sale of securities. When winding up a partnership’s business, the assets are used to discharge any remaining obligations, including those to partners who are creditors. Anything left over is distributed to the partners according to their “separation” agreement if one exists. Your attorney can also draft a statement of dissolution, which is sometimes required in Minnesota.
You must notify the Minnesota Department of Revenue to ensure that taxes are no longer assessed automatically. Cancel registrations, permits, licenses and business names. Advise suppliers, customers and the authorities about the partnership’s dissolution.
The business law attorneys at Hess & Jendro Law Office, P.A. are equally experienced in business formation and conclusion and can help you draft a solid partnership agreement or negotiate a successful partnership termination.