How Do I End My Partnership Without Ending My Business?
With the added complexity of corporate management, a business partnership may take as much relationship finesse as a marriage. Sometimes, for any number of reasons, it can make sense to end that relationship. However, that does not necessarily mean you need to end the business itself.
The steps required to end a partnership will vary depending on the partnership relationship’s structure, the business’s nature, and several other factors. It is usually not as simple as one partner handing over money to buy out the other partner’s interest in the business. For that reason, it is advisable to consult an experienced business law attorney to help ensure compliance with state or federal laws, reduce your risk of liability and tax exposure, and enable you to take advantage of available provisions to assist with your business structure moving forward.
Factors That Affect the Process of Ending a Partnership
Partnerships in Atlanta can take many forms and be set up with different structures. Of course, partnerships may operate a wide variety of businesses, and the goals of the partners vary. All of these factors can affect the process of ending a partnership.
Parties seeking to end a partnership while continuing the business should consider:
- Legal requirements regarding the structure of the partnership
- Whether new partners will be brought in to replace a departing partner
- The terms of the partnership agreement
- Tax implications
- Provisions for handling bank accounts, insurance policies, contracts, and other business affairs
- Noncompetition agreements
An experienced business law attorney can help evaluate the needs and guide a partnership through the ending phases and development of a new structure for the future.
When a General Partnership is Not Formalized
A partnership may be an informal working arrangement. Under Georgia law, whenever two or more individuals decide to work together for profit, a general partnership is created even if the parties do not have any written agreement.
Ending a general partnership operating without a written agreement can be simpler than dissolving more formalized partnerships—but sometimes, just the opposite is true. If the split is not amicable, each party may want to be represented by a business injury lawyer to ensure that assets and debts are allocated fairly. Because the parties in this type of partnership have not spelled out their obligations ahead of time, it could take considerable negotiation or even litigation to resolve the issues involved with ending the partnership.
Ending a Partnership Subject to an Agreement
Many partnerships operate under a formal contract known as a partnership agreement. The process of ending the partnership will be governed by the terms of the agreement and applicable laws. For instance, the partnership agreement may allow one partner to buy out the other’s interests while the business continues to operate.
Without this type of provision, it may be possible to continue business operations after the partnership is dissolved by taking steps that legally end one company and start a new one. In other words, a business may appear to continue uninterrupted, but the parties involved take various steps behind the scenes to restructure the business in a new format.
A Business Law Attorney Can Assist with Ending a Partnership While a Business Continues
Chances are, your customers do not care whether you operate as a partnership, sole proprietorship, or some type of corporation. Whatever is necessary to end a partnership arrangement, there are almost always methods to enable a business to continue to provide goods and services while the leadership and business structure change.
However, because the methods will vary according to the business’s legal requirements and the individuals involved, it is a good idea to consult a knowledgeable business law attorney who can help resolve conflicts and pave the way to move forward after the partnership ends. To talk to one of the experienced business law counselors at DuBose Miller, contact us today.