How to Liquidate a General Partnership
Businesses can be legally structured as sole proprietorships, corporations or partnerships. All three types have specific advantages and disadvantages in terms of operations, taxation and liability, but partnerships have become a more popular alternative in the last few decades as laws regarding them have been liberalized and standardized. There are three basic types of partnerships: general partnerships, where all partners equally share profit and liability; limited partnerships, which create a special class of limited partners; and limited liability partnerships, a special class of partnership only available to accountants or lawyers.
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Instructions
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Consult the partnership agreement signed when the general partnership was formed to see if specific clauses govern the dissolution of the partnership. Partnership agreements usually have certain provisions in the event of termination of the partnership, and/or specific circumstances that trigger the dissolution of the partnership. Note that any partner in a general partnership can demand the dissolution of the partnership at any time --- subject, of course, to the provisions of the general partnership agreement.
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Follow the partnership agreement regarding the dissolution of the partnership. If it isn't specified in the agreement, the general partners must appoint one partner as the "liquidating partner." The liquidating partner is responsible for collecting all monies owed or loaned assets, paying debts, liquidating assets, distributing assets and debts, dealing with all tax matters, and officially dissolving the partnership and giving public notice of such if required by law. Once the process of dissolving the partnership has began, only the liquidating partner has the legal authority to act in the name of the business.
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Collect all debts and liquidate all assets of the partnership as expeditiously as possible. This process is totally under the control of the liquidating partner; the former general partners just have to wait until the partnership is formally dissolved to receive their share.
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Contact the state department of revenue or taxation that issued the original business operations permit for your partnership to inform it that the partnership is dissolved when all assets have been liquidated or assigned for distribution. States usually require posting public notice of the dissolution of the partnership by an ad in the classified ads of the local newspaper and/or posting notice online.
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Distribute the assets of the partnership to the former general partners. The liquidating partner is also responsible for filing the final federal and state income tax returns for the dissolved partnership.
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