While you might like to think that your business partnership will be immune to things that can affect your other personal relationships, many business partners find that regardless of how much they love their business and want to find success, they just can’t keep working with their previous business partner anymore.
Andwhen this happens, just like with a marriage divorce, you have to go through the proper channels to ensure everything is taken care of and done legally for your separation. So to help make this transition a little easier, here are three tips for dissolving a business partnership.
Revisit Your Partnership Agreement
If you were serious about your business from the beginning, you likely created a partnership agreement right as you and your partner were forming your business together. Hopefully you stated somewhere in this document what you would do if your partnership were to dissolve. However, even if you have this information in your agreement, there will still likely be something you need to work out together. For example, Caron Beesley, a contributor to the U.S. Small Business Administration, shares that you have to come up with a valuation for your business, handle any loans you’re still paying back, deal with contract you’re still under, and figure out how to divide your assets. But if you laid out a plan for this in your partnership agreement, coming up with a plan moving forward shouldn’t be as difficult.
Create A Plan
As was mentioned above, you and your business partner are going to want to create a plan for how to best dissolve your business and your professional ties. According to Jean Murray, a contributor to The Balance, this plan should include things like what tasks need to be done, what payments need to be made, any documents that need to be filed, and how to notify those with a stake or share in your business. As part of your plan, assign these tasks out between you and your partner and come up with a timeline for when these things will be accomplished by.
Consider Splitting The Dissolution Costs
For most businesses, there are going to be some kind of costs associated with dissolving your business and your partnership. Nancy T. Nguyen, a contributor to the Huffington Post, shares that there will most be legal fees or fees associated with filing certain paperwork. As a good gesture, you may want to consider splitting these costs and fees, or at least paying the same percentage as your own share in the business. By doing this, you can ensure that the last thing you do as business partners isn’t fighting over who should foot the bill for your final dissolution.
If you are considering separating from your business partner, consider using the tips mentioned above to handle this situation as smoothly as you can.