One of the most important decisions you will make when you start a business is choosing which type of structure to set up. And if you have two or more people who want to own a company, business law allows you to set up a partnership.
There are three common types of partnerships: general partnerships, joint ventures and limited partnerships.
With a general partnership, partners share equally in duties and profits. With joint ventures, the partnership is only established for a limited time, and with limited partnerships, one or more of the partners takes a backseat role, while one partner makes all the major management decisions.
Limited partnerships are the only structure required by business law to have a written document. This is to protect the limited partners from the company’s liabilities.
Partnerships can be beneficial for several reasons, especially if one partner has more capital to invest in the company but still wants the benefit of the other partner’s expertise and skills. But as with all businesses, trouble can arise because of disagreements, and when it reaches a boiling point, the partnership must be dissolved.
How Is a Partnership Dissolved Under Business Law?
Because most partnerships do not require a formal document, conflicts can arise when a partner wants to end the arrangement.
If you created a written agreement establishing the partnership, then more than likely, that document also contains the procedure necessary to dissolve the partnership.
However, if the written agreement doesn’t have this provision, or if you never created a written agreement, one partner can give notice of his or her intent to end the partnership.
Some states have created specific regulations for partnerships started without a written agreement. In Florida for example, the Revised Uniform Partnership Act covers those regulations.
Typically, the two biggest potential sources of conflict are who will pay the company’s debts, and who how to divide the assets.
If one of your partners don’t agree to ending the business, you can try to buy out the partner. If you still can’t reach a solution, you can hire a mediator to help achieve a compromise.
But if you still can’t end the partnership in a way that is agreeable to everyone involved, you will have to go to court to have a judge make the final decision.
The Importance of An Experienced Business Lawyer
There are many aspects to running a business that can become legal minefields if you don’t have the right counsel. That’s especially true when it comes to your business structure, because if you choose a partnership and that partnership goes south, dissolving your union can be challenging. That’s why you need the guiding hand of the Law Office of Todd M. Kurland, P.A. We are experienced Florida business attorneys who are equally comfortable helping startups or established businesses. Please call us today at (561) 876-4907 to schedule a free consultation.