Business partnerships may be dissolved for any number of reasons. These can include a death, bankruptcy of the business, or simply the desire to move on. Once a vote has been taken to dissolve a partnership, the partners must adhere to the terms of the contract and state law to ensure that the appropriate steps are taken to formally end the relationship.
Reviewing the Partnership Agreement
Most partnership agreements identify the steps that need to be taken in order to dissolve the partnership. If there is no written agreement, then the dissolution of the partnership will be governed by the Uniform Partnership Act. A business law attorney in Illinois can help partners review the agreement and begin the process of formally dissolving the business partnership.
Dividing Assets & Debts
The dissolution of a business partnership requires the partners to determine how outstanding debts will be paid and how the business assets will be divided amongst the partners. One of the first things to determine is whether the business will permanently close or continue in operation once the partnership is dissolved. If it will, then a business law attorney can help the partners identify the most efficient and equitable method of dividing assets and business debts so that the enterprise can remain open for business.
Filing with the State & Addressing Taxes
Illinois does not require individuals to file formal notice of a partnership’s dissolution. However, it is advisable to file a Statement of Dissolution with the Secretary of State’s office. This can help protect both partners from legal liability for any debts or actions that occur after the partnership is dissolved.
If the business is registered in multiple states or international jurisdictions, the partners will also need to take the proper steps to terminate the partnership in those jurisdictions. A business law attorney can identify the steps required to terminate the partnership in these jurisdictions.
Individuals should also plan to get a tax clearance from the Illinois Department of Revenue. This can help ensure that all tax issues are resolved and that the partners won’t incur any fines or penalties for outstanding tax balances.
Notifying Interested Parties
Unless specified within the partnership agreement, it’s not necessary to send out a formal notification to clients or creditors. However, it’s advisable to send notification because it can help protect partners from legal liability on outstanding contracts and agreements. This dissolution can be sent via regular mail, email, or by publishing a notice in the local newspaper.
