If one of the members of a business partnership wants to end the relationship, the law prohibits simply closing a company’s doors. Instead, the dissolution of a partnership is required. Dissolution helps to make sure that none of the partners remain liable for the company’s cash flow, debts, taxes, or any other lingering business concerns. Correctly dissolving a partnership, however, can sometimes be difficult. The following will review some of the tips that you can follow to make dissolving a business partnership as painless as possible.

Examine Your Partnership Agreement

Many business partners create specific plans about how the partnership will be dissolved at the time that the partnership is created. If your partnership agreement already contains terms about how dissolution should occur, it is simply a matter of following the terms of the agreement.

Unfortunately, some business partnerships in Michigan do not last for very long. For this reason,  it is a wise idea to always have a partnership agreement signed before starting business. These documents have the potential to help make sure the dissolution proceeds smoothly. You can take steps today to ensure that you can dissolve a partnership in case it ever becomes necessary to do so.

Create a Partnership Dissolution Agreement

If a partnership agreement does not contain these terms, however, business partners will need to create a plan for dissolution. It can be particularly difficult to reach an agreement in some cases, however. It is always helpful at this point to obtain the assistance of a corporate lawyer who can help to find a solution agreeable to everyone involved with the partnership.

This agreement will include a number of different details including how you are going to terminate the business to how you will address the various complications that can arise. Once each member of the partnership is content with the agreement, you should all sign the document.

Recognize the Value of Buy Sell Agreements

Sometimes, one of the partners might want to keep the business for him or herself. In these cases, a buy sell agreement can prove to be particularly valuable. A buy sell agreement helps to determine who is able to buy into the business when one of the partners voluntarily or involuntarily leaves the partnership. Buy sell agreements are particularly valuable in protecting partners who are already in the business.

Inform Everyone

It is important to inform everyone with whom the partnership does business that the dissolution is occurring. This includes distributors, suppliers, other companies, etc. These notifications emphasize that once the partnership ceases to exist, none of the partners will liable for any debts that were incurred by the partnership.

Speak with a Business Lawyer Today

There are a number of complex steps involved with ending a partnership. Many business owners find it helpful to obtain the assistance of an experienced attorney to navigate these issues. Contact Resnick Law to obtain the assistance of an experience corporate law attorney who can help you navigate the dissolution of your business partnership.

(image courtesy of Luke van Zyl)

Deciding to end a limited liability company (LLC) in Michigan involves a number of challenging tasks. Because the dissolution process is often complex, many business owners decide to obtain the assistance of an experienced business attorney to ensure everything wraps up smoothly. The following are some of the basic steps through which your Michigan business attorney can guide you.

Examine Your LLC’S Articles of Formation

LLCs are registered with the state of Michigan. While the state has the power to dissolve an LLC through a court order, business owners can also decide on their own to end an LLC. For many companies, the guidelines for dissolving the business will be in the articles of formation. The articles of formation may require the LLC members to vote on whether to dissolve the company. There are also many other steps that might be required to dissolve an LLC, including establishing a specific meeting time to discuss these matters, and providing all members with sufficient notice.

This is not the only way a business owners can voluntarily dissolve an LLC, however. The state’s LLC ACT allows the voluntary dissolution of an LLC through a unanimous vote by all LLC members.

Understand the Importance of a Certificate of Dissolution

After an LLC’s members vote on whether to dissolve the structure, the parties must file a document with the Michigan Department of Licensing and Regulatory Affairs called a certificate of dissolution. Your LLC must be in good standing with the state of Michigan before you file the certificate.

Certificates of dissolution contain an array of important information about your LLC, including the company’s name, the reason for the dissolution, and the date on which the dissolution occurred. These certificates must be signed by an authorized individual.

Notify Creditors

As part of the dissolution of an LLC, it is important to provide adequate notice to creditors as well as other people who might have an interest in the company. While not required, providing notice helps to limit the liability that you ultimately end up facing.

One of the ways to provide notice is by sending written communication to each creditor after the date of dissolution. Some LLC owners decide to provide notice by publishing information about the LLC’s dissolution in the newspaper.

Submit a Tax Clearance Request

The state of Michigan requires LLC owners to submit a tax clearance request to the Michigan Department of Treasury within 60 days of filing a certificate of dissolution. These forms are available online. While the exact penalties that a person ends up facing due to failure to submit this form is uncertain, it is still a wise idea to do so.

Speak with an Experienced Business Law Attorney

Dissolving an LLC in Michigan is just one of the many complicated legal aspects of ending your business. Business owners who are interested in ending their LLCs should contact an experienced attorney. Do not hesitate to speak with a knowledgeable attorney at Resnick Law today. No matter if you are beginning or ending your LLC, we can help you navigate even the most complicated business law issues.

(image courtesy of Evan Wise)