How Do You Dissolve a Partnership in Florida? Nothing is everlasting, neither are business partnerships. Between the various reasons that may lead a business to shut down its activities, the most common issues include low profitability and fierce competition. Nonetheless, sometimes the reason behind the end of a business is a dispute between partners, as well as one of the parties quitting for personal reasons.
Regardless, ending a business in Florida does not mean simply turn the lights out, close the doors, and go away. This process requires specific closure or dissolution requirements under Florida law.
In this article, we will show you how a partnership dissolution agreement works and what are the required procedures in dissolving a business partnership.
Back to Basics- What Is a Business Partnership?
As explained by the US Small Business Administration (SBA), a partnership is defined as the simplest structure for two or more people to own a business together. Usually, there are two different types of business partnerships- limited partnerships (LPs) and limited liability partnerships (LLPs).
Limited Partnerships (LPs)
A limited partnership is a partnership consisting of a general partner and a limited partner. The general partner is responsible for managing the business and has unlimited personal liability for the debts and other obligations of the Limited Partnership.
Meanwhile, the limited partner has limited liability, which means limited control in the company as well.
Limited Liability Partnerships (LLPs)
Differently, a limited liability partnership is a partnership entered into two or more partners in which each partner is not responsible or liable for another partner’s actions, which includes misconduct or negligence.
In this case, all partners have limited liability, both concerning the business as with the other party’s actions.
First Step – Drafting a Proper Partnership Agreement
Having a solid partnership agreement, to begin with, will ease the process of dissolution. This is especially useful in cases where some partners want to remain in the business even if one partner decides to leave.
Before starting a business, it is essential to draft a proper partnership agreement, outlining the type of partnership, the roles, and responsibilities of each partner. It is also important to make clear whether one partner can be bought out, or whether the company must be dissolved if one partner decides to walk away.
Besides, it must be plain to see who is permitted to buy the business as a new partner and what will happen in case one of the partners needs to leave the business for several reasons, including death, divorce, and other issues.
Nonetheless, there are situations in which the partnership dissolution is handled through a partnership dissolution agreement.
Explaining a Partnership Dissolution Agreement
A partnership dissolution agreement can be issued when all partners in a business want to leave the partnership. Hence, the business will cease its activities, and they want to move on with their lives.
In any situation where the original partnership agreement does not provide plain information about how to dissolve the business, a partnership dissolution agreement can provide a solution. A proper partnership dissolution agreement should contain several topics, including each partners’ duty regarding the dissolution, the timeline for dissolution procedures, how outstanding business debts will be paid, and the distribution of assets attached to the company.
How Do You Dissolve a Partnership in Florida? – Get Help Now
Drafting a statement of dissolution and ensuring that it meets all the requirements under Florida law can be a complex task. Hence, do not be afraid to seek the guidance of a business attorney.