Dissolving a business partnership, or business dispute, can be a lengthy and expensive process, so it’s easy to see why most business partners try to avoid this situation. However, there are times when a “business dispute” is necessary. Perhaps the partners have a serious disagreement that they can’t seem to resolve. Maybe one partner wants the other to buy them out so that they can move on to new challenges.
No matter why you and your business partner may want to dissolve your business partnership, it’s important that you proceed in accordance with all applicable laws and regulations. This will help the process conclude swiftly. As the relevant laws and regulations can be quite complex, it’s best to hire a business attorney to help you with dissolving a business partnership.
Read on to learn more about getting a “business dispute.”
When You Should Split With Your Business Partner
While you shouldn’t split with your business partner over a petty disagreement, there are times when dissolving a partnership is necessary. Irreconcilable differences are the main cause of business disputes, but this is far from the only legitimate cause. For example, many business partnerships are dissolved because one partner decides to retire. It is also common for business partnerships to have a time frame that was established when the partnership was originally formed. If the end date has been reached and neither party decides to extend their partnership, it must be dissolved in accordance with the applicable laws.
The Steps for Dissolving a Business Partnership in Georgia
Dissolving a business partnership legally and equitably must be completed in an organized manner. Thankfully, there is a well-established process for dissolving a partnership in Georgia. The steps in this process include inspecting the partnership agreement, meeting with your business partner, getting an attorney to draft the dissolution agreement, filing the required forms, and closing the business’s accounts.
Inspecting The Partnership Documents
The first step that any businessperson who wants to dissolve a partnership should take is inspecting the partnership agreement. This agreement was likely completed when the partnership was first formed. Most business partnership agreements include a clause covering dissolution. If the partnership agreement does include such a clause, you must follow it to the letter. Otherwise, your partner could sue you for breach of contract.
If your partnership agreement does not include a dissolution clause, you will have to work things out with your partner. The most important issues that you must agree upon include how to resolve the business’s finances, splitting the business’s clients, and whether the partner who remains will continue running the company. You may need to hire a third-party mediator or get a court-ordered dissolution if you cannot work things out with your partner.
Discuss the Situation With Your Business Partner
After you’ve consulted the partnership documents, it’s time to discuss the situation with your business partner. If your partnership agreement did not include a dissolution clause, you may have already started this discussion. Even if the agreement does have such a clause, you must meet with your partner to tell them you want to dissolve the partnership.
It’s a good idea to get legal advice first. An experienced business attorney can help you prepare for this crucial part of the process. They can help you know what to expect in terms of negotiating terms with your partner. Keep in mind that you will have less leverage if you are trying to convince your partner to leave instead of leaving yourself.
Have a Business Attorney Draft the Dissolution Documents
Once you and your partner have reached an agreement about the terms of the dissolution, it’s time to have an attorney draft the dissolution documents. It’s not a good idea to attempt to draft these documents yourself, as they must cover a range of issues and follow various laws.
One of the documents, the statement of dissolution, must be submitted to the state of Georgia. The state must process this document before your partnership has been legally dissolved. This may take up to 90 days, though it usually does not take quite this long.
Pay Debts & Close Accounts
Before the partnership can be dissolved, all debts must be paid and all accounts need to be closed. This is the case even if the business will continue to exist, as it will technically be a new legal entity. In addition to paying off debts and closing bank accounts and lines of credit, you must also cancel or terminate all relevant licenses and permits. Finally, you will have to terminate your business’s registration with the state of Georgia.
Cancel Contracts
Just as you need to close accounts and cancel licenses and permits, you must also cancel your company’s contracts. Many contracts will automatically become invalid if the business no longer exists. However, this is not always the case.
Notify Vendors, Partners, & Customers
You must notify your vendors, partners, and customers that your partnership is being dissolved. It’s important to do this in a way that paints both partners in a positive light. This is especially vital if the remaining partner will continue to use the same brand.
A Business Attorney Can Help With Partnership Dissolution
As you can see, it is vital that you hire a top-notch business attorney when dissolving a business partnership. As the relevant laws can be quite complex, you should hire an experienced attorney. Cory Barnwell at Barnwell Law Group is highly experienced with business dispute. He has successfully helped many businesspeople dissolve partnerships in Georgia. If you’d like to know more about the services Mr. Barnwell can provide, reach out through his website today.