A lot of people go into business with family, friends or investors, and many of them decide to form partnerships.  As a legally recognised business entity, a partnership can be formed between 2 or more people who intend to make a profit with their business venture.  Though easily formed, many people often find that partnerships are difficult to end properly.  It is usually necessary to draw up a suitable Partnership Dissolution Agreement to ensure the completion of the partnership is successfully achieved.  If you are in a partnership and want to dissolve it, here is what you need to know?

WHAT IS A PARTNERSHIP DISSOLUTION AGREEMENT?  It is just what it sounds like it is.  A Partnership Dissolution Agreement is a document drafted to officially end the existence of a partnership.  Since a partnership is a legally recognised business structure, a written agreement must be completed before the partnership can officially be concluded.  A Partnership Dissolution Agreement allows all the members of a partnership to do this with ease.  

WHAT IF WE CAN’T AGREE TO THE DISSOLUTION?  If the partners cannot come to an agreement as to how they will end the partnership, they usually will have to refer to the terms of the original Partnership Agreement.  Additionally, if the Partnership Dissolution Agreement is signed and agreed to by all parties, but in the process of dissolution a conflict arises that cannot be settled, the agreement should include a method for settling such disputes.  This is usually accomplished by the inclusion of an arbitration or mediation clause in the dissolution agreement. 

WHAT DO I NEED TO INCLUDE IN THE PARTNERSHIP DISSOLUTION AGREEMENT?  Before you can successfully end the partnership, you must ensure the dissolution agreement includes some needed information.  The document will have to state what the various partner’s interest are, what kind of distribution of assets or debts will take place, the date of dissolution, etc.  The details of a dissolution agreement must be complete and make it clear to all parties what happens to the partnership assets and interests.  If the partners are to receive payments or portions of the partnership’s liquidated assets, these amounts will have to be stated in the agreement. 

DO WE HAVE TO INCLUDE A FINAL FINANCIAL ACCOUNT?  Almost always.  Before the partnership can conclude business, a final financial inventory will have to be made.  These are usually incorporated into the Partnership Dissolution Agreement, either by reference or directly.

The decision to conclude the business of a partnership is one that needs to be prepared for by all members.  No matter the reason for concluding the partnership, you must ensure the process is completed effectively.  A properly drafted Partnership Dissolution Agreement will make it clear what each partner’s rights and obligations are.  The business of the partnership will be concluded simply and without conflict if you create a good dissolution agreement.  If you create an unclear document, ending the partnership may be more trouble that it was to run it. 

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