End a Biz Partnership Without Ending Your Business
Many businesses start out as partnerships but that doesn't mean they're destined to stay that way.
Business partnerships can end for a number of reasons, both good and bad. Maybe one partner wants to retire, is moving, or is having some financial difficulty and needs to bow out. Or maybe the relationship between the partners is strained and that is negatively affecting the business.
The best time to figure out ending a business partnership is when you start the company. But if you didn't take of it then, you can still manage it when it happens.
In a business partnership, the partners equally share the profits and the debts of the company unless the initial business agreement says otherwise.
When a partner wants out of the business, they need to be compensated for their share. If the company is profitable that means they get a portion of the earnings. If it's not, they may have to settle up their debts.
If the relationship between the partners has gone bad, it can be hard to determine a fair buyout price or figure out who should leave the business.
Spouses who need help go to marriage counselors but the equivalent for business partners is generally to find a good attorney who specializes in business.
It might be that after working with your lawyer, issues between business partners can be resolved. But if not the lawyer's dispute resolution skills can help salvage a personal relationship even if your professional one has gone sour.
Once you've found a way to reach an agreement your attorney can write it up so that it is clear to you and to any organizations that monitor your business such as the IRS or state government authorities.
A business partnership is a relationship and like any relationship, it can fall apart. Open and honest communication between partners is important but if that can't sustain it, don't let it tear your company apart.
Ending a business partnership can be complicated but it doesn't have to stall your business.
Related Resources:
- What to Do When Your Partnership Sours (Entrepreneur)
- Necessary Steps to Dissolve Your Company (FindLaw)
- What To Do When Your Business Partner Goes Bankrupt (Atlanta Bankruptcy Law News)
