Before You Go Completely Nuts.
A bad business partnership can ruin your life. Much like a romantic relationship, business partners are together constantly — always texting, emailing, and chatting late into the night. While the honeymoon phase was wonderful, the rest was a long, slow descent into madness. With luck you have access to a great attorney who is well-versed in the business law jargon required to legally dissolve the partnership. Sodoma Law attorneys can save your sanity and your bank account with these tips.
Is it Really Over?
This scenario is more common than one would think. Denial is the number one reason a bad business partnership keeps going long after it should have ended. However, that does not mean that every fight between partners is the end of a business. Think about it — you likely poured your heart, soul, time, and money into starting this business, so ending it isn’t something to be taken lightly. Sometimes, discussing your differences with your partner creates a stronger team. Creative, innovative, and successful solutions have come out of in-business fighting. However, so too have incredible spin-offs; if your self-mediated conversation gets you nowhere and you still feel like you need to go your separate ways, keep reading.
Keeping Your Cool…And Hiring a Lawyer
I get it…you’re upset with your partner or how things have played out. You may feel betrayed, or worse, cheated out of something you worked hard to make reality. However, stirring up trouble with your partner is a great way to stir up trouble with your wallet — business splits that don’t end by mutual agreement can cost tens of thousands of dollars, so it is in your best interests to be as generous and patient as you can with your erstwhile partner. It will pay off. Literally.
But before you start making promises, know this — you need a lawyer. Unless you are a business attorney yourself, dissolving your business partnership without legal advice is not a good move; you could end up with the short end of the stick once you split assets and cut ties.
Knowing Your End Game
Talk with your lawyer about what you want out of this. Do you want to keep going with the business, or would you rather cut and run? If your soon-to-be-former business partner continues alone, will your family and friend employees still have jobs? What about partnership’s assets — can they be divided in such a way that both parties are treated fairly? Your lawyer can help you figure out what your reasonable and fair share is, and help ensure that you don’t get hung out to dry when assets are divided up.
Voting to Dissolve
Now it’s time to agree that “it’s over”…but maybe you can stay friends on Facebook. At least you won’t have to deal with all of those late night texts anymore!
Most business partnerships have a written agreement that requires each member to vote to dissolve. This should likely be in writing, and your lawyer can help you cross all of your t’s in the written agreement so that the vote is clear and unambiguous. They may or may not also help you wipe your tears for the end of an era.
Chin up pal, you’re almost done!
Handling Debts & Splitting the Last Check
Most businesses have some debt at the time of dissolution, and like the assets, an agreement needs to be reached as to how those debts will be divided. It’s in your best interest to be sure your agreement who pays what and when. Your lawyer can draw up agreements to handle debt allocation now and in the future. Existing and future debts, and who should pay them, must be a consideration. Be prepared by addressing them now; don’t just keep your fingers crossed and hope they don’t come up.
Sending Papers to the Right People
Finally, you’ll need to file some documents and publicly establish the business is over. This is what business attorneys do. Your lawyer can help you file the dissolution paperwork to confirm that your partnership is over, and he can also help publish a notice in your local newspaper to start the clock on creditors alleging the partnership, or you, owe them money (remember those existing and future debts?).
That’s it! You did it! I know it was hard and likely sad, but ending this business partnership was the right thing for you. I promise you’ll feel a lot better once it really is all done — a huge, expensive weight off your shoulders.
Now, on to better things!