A limited partnership is a corporate structure that involves a business agreement between one or more general partners and one or more limited partners. The limited partner is responsible only for the amount invested in the venture, while the general partner assumes all debts and liabilities of the association. The best time to consider how a partnership will end is at its conception. The process used to dissolve a partnership should be clearly outlined in the partnership agreement— the legal document used to establish a partnership. If the partnership agreement doesn’t contain the dissolution procedure the partners must either come to a consensus about the partnership termination, and the final asset disbursement, or dispute the issue in court.
Review the partnership agreement and determine if there are procedures outlined for dissolution. The partnership agreement is a legally binding contract, so any procedures outlined there must be adhered to. The dissolution laws of the state—usually accessible through the secretary of state—will apply if there are no termination procedures given in the agreement.
Contact the secretary of state (SOS) within the partnership’s state. The secretary of state is typically given the responsibility of processing the registration and dissolution of limited partnerships. The SOS website normally contains the procedures, forms and fees associated with the dissolution process. Follow the instructions given and file the dissolution form supplied by the site, with the appropriate fee, to have the state records adjusted accordingly.
Contact all creditors regarding accounts. Partnerships are normally required to handle all debts with creditors at dissolution. Notify creditors of the dissolution, in writing, immediately after processing the paperwork with the secretary of state. Inform creditors about the termination and where to send account claims. The partners have the right to accept or reject claims. Accepted claims must be satisfied before disbursement of final assets.
Disburse remaining assets. The final assets remaining after the debts are settled are disbursed amongst the partners. The funds are disbursed according to the statute and regulations in the state code of the state where the partnership was established.
Cancel any jointly held permits, licenses and accounts under the partnership. If there are any joint permits, licenses issued by the state, or bank accounts open under the partnership, these are terminated, and the partnership is officially dissolved.