How Do You End a Business Partnership in Maryland?

The ending of a business partnership may require a lot more work than a business owner might suspect. If the business partners do not agree on how to resolve certain issues, this could make the process even more complicated. That is why it is important to ensure you covered all your bases when concluding a business partnership. If you require legal assistance with the dissolution of your partnership, contact an experienced Baltimore business advisory attorney today. At the Heyman Law Firm, we are dedicated to providing you with the legal representation you deserve to accomplish your business goals. The Heyman Law Firm explains how to end a business partnership in Maryland.

How to Dissolve a Business Partnership

The dissolution of a partnership cannot be accomplished by simply dividing assets between partners and closing up any physical locations. The owners of the business must take several steps to wrap up the business and ensure all their legal liabilities have been addressed. The following is a list of steps to take when dissolving your business partnership.

Examine the Business Partnership Agreement

When forming a business partnership, the business owners will typically create an agreement outlining the terms of the partnership. This agreement should address how the business will be operated and how the business might be dissolved if it becomes unprofitable or an owner wants to retire. However, if terms of the partnership agreement are vague, a contract dispute may arise.

If the owners of the business did not draft an operating agreement, the partners would have to come to an agreement about how to dissolve the business. If the business partners cannot come to an agreement, it may be necessary to turn to business litigation. A court can help the partners determine a fair way to distribute business assets between the partners.

Calculate the Assets and Liabilities of the Business

Calculating the finances of the partnership is important when dissolving the company. The following factors should be considered when dissolving a partnership:

• The dollar value of the business
• The assets owned by the partnership
• Whether any assets were on loan from a partner
• Liabilities to creditors
• The ownership interest of each partner

If you and your business partners cannot agree on the value of the business, you should consider working with a firm that could evaluate the worth of the business. Inaccurately determining the value of the business can have a serious impact when it is time for creditors to be paid and ownership interests to be divided.

Drafting a Dissolution Agreement

A dissolution agreement will set out various terms, like how the company’s liabilities will be managed and the portion of assets that each partner should receive once creditors are paid. A dissolution agreement should address a wide range of issues that may present themselves during or even after the dissolution. For example, if a business partner fails to pay his or her share of the business debt, this can place other owners at risk of a lawsuit.

Other factors that should be considered in the dissolution agreement include:

• Who will retain property left over from the partnership?
• Has any partner contributed personal property that should be returned or repaired if damaged?
• Which partner will handle the dissolution procedure?
• Who is responsible for handling debt that cannot be paid by other partners?

Once all the terms of the business dissolution have been included in the agreement, the document should be signed by each partner. If the partners cannot agree on all the terms, it may be necessary to turn to the courts.

However, if all partners signed the agreement, you should then file the document with the State of Maryland, or the state where you are incorporated. While not every state requires a business to file a formal dissolution, this may be wise to ensure that you do not have any surprises later.

It is also important to inform your clients and other business contacts that your business has been dissolved. You could also seize this opportunity to refer them to others you may have worked with in the past.

Other factors should be considered when dissolving a partnership. Our firm can help you deal with any problems that arise during the dissolution of your business.

Work with Our Experienced Maryland Business Litigation Lawyers Today

If you are unsure of how to dissolve a business partnership in Maryland, contact an experienced Maryland business solutions lawyer. The legal team at the Heyman Law Firm possess a wealth of experience handling various complex business issues for business owners across the State of Maryland, and we would be proud to work with you. Dissolving a business partnership is a multi-step process that can trigger legal issues if not performed correctly. To schedule a confidential consultation to discuss your business dissolution, contact the Heyman Law Firm at (410) 305-9287, or contact us online.