In Florida, it is not hard to form a general partnership, as they start existing by default when two or more partners engage in business activities together.
However, many people do not know how to dissolve a business partnership, especially when there is no specified term for the arrangement and the dissolution depends on the voluntary decision of the partners involved.
In this article, you will find out how to dissolve a business partnership in Florida.
Dissolving a Business Partnership in Florida – Step-by-Step Guide
Reviewing the Partnership Agreement
Florida business law does not require a written partnership agreement. However, the ideal approach is to have a partnership agreement in place, whether the partners are involved in a general partnership or limited partnership.
When a partnership does not have a preexisting agreement, the solution is to rely on the default provisions of Florida’s Revised Uniform Partnership Act (Florida Statutes Chapter 620).
Discussing the Dissolution Between the Partners Involved in Business
It is fundamental to discuss the dissolution with all partners involved in the business partnership. In this sense, make sure to address two key points, which are:
- Who is responsible for paying existing outstanding debts?
- How will the partners divide the remaining partnership assets among them?
In Florida, a well-drafted partnership agreement should guide these key points to guarantee a smoother dissolution process. However, there may be cases in which individual partners want other partners to pay particular liabilities not covered by the document.
In such cases, you will need the help of a legal advisor to modify, add, or remove terms in a Florida partnership agreement via amendments.
Proceeding with the Dissolution
Predominantly, partnership agreements provide that all or a majority of partners involved in a business must consent to dissolve the partnership. If there is your case, you should hold a voting session with all partners to officially determine the dissolution.
Whether you obtain the unanimous or majority consent required, you must record the results of the vote in writing to dissolve the company.
If there is no partnership agreement in place, Florida’s Revised Uniform Partnership Act provides that an at-will partnership can be dissolved if any partner decides to leave the partnership.
However, there is an exception when the remaining partners decide to continue the partnership without the dissociated partner.
Submitting the Paperwork with the State
Although general partnerships in Florida are not required to file with the State to exist, it is a good idea to clarify that the partnership has ended to limit each partner’s liability. Hence, we recommend you file a Statement of Dissolution with the Department of State’s Division of Corporations (DOC).
After filing a Statement of Dissolution with the help of a business attorney in Florida, you must immediately provide a copy of the document to any partner not involved in the filing process.
Paying Debts and Distributing the Remaining Assets
In Florida, there are some additional steps to dissolve a partnership, which is often referred to as “winding up” the business. Typically, the process of winding up a partnership in Florida requires you to:
- complete remaining partnership work in progress
- pay any existing debt(s)
- sell a number of the company’s assets (upon the agreement of all the partners involved)
- distribute the business’s remaining assets between the partners
Even though partnerships are not legally required to notify third parties about the dissolution, it is the recommended approach. In this sense, it is possible to notify people by sending written notification, publishing a notice in one or more local newspapers, or using the internet.
Closing Down the Dissolution
Lastly, it is crucial to notify the Department of Revenue (DOR) about the partnership dissolution by submitting the information using their online system.
For federal tax purposes, IRS rules provide that if a partnership terminates “before the end of its normal tax year, the final federal return is due by 15th day of the fourth month following the termination date.”
When a partnership is either registered or qualified to do business in other states, the dissolution process requires partners to file separate forms to terminate the business’s right to conduct business in each one of those states.
How to Dissolve a Business Partnership in Florida – Work with Jurado and Associates, P.A.
Dissolving a partnership in Florida is a complex and detail-oriented process, which means it is essential to work with an expert business attorney to ensure a positive outcome. Call Attorney Romy B. Jurado at (305) 921-0976 or send an email at Romy@juradolawfirm.com to schedule a consultation.