Dissolving a partnership without an agreement can be a challenging process, particularly if you are a business owner in Texas. While an agreement can provide a clear roadmap for how to dissolve a partnership, a lack of one can leave you feeling unsure about the steps you need to take.
Fortunately, the Texas Business Organizations Code provides some guidance around dissolving a partnership without an agreement. Here’s what you need to know.
1. Identify the type of partnership.
The first step in dissolving a partnership without an agreement is to understand what type of partnership you have. There are three main types of partnerships in Texas:
– General Partnership: This is the most common type of partnership, and it’s the default when two or more people start a business together without creating any other legal structure. In a general partnership, each partner has equal rights and responsibilities.
– Limited Partnership: In a limited partnership, there is at least one general partner who has unlimited liability for the business’s debts and at least one limited partner who has limited liability. Limited partners are typically passive investors who do not have a say in the day-to-day operations of the business.
– Limited Liability Partnership: A limited liability partnership (LLP) is a type of partnership where all partners have limited liability.
Understanding the type of partnership you have will help you determine your next steps.
2. Notify your partner(s).
Once you have identified the type of partnership, you will need to notify your partner(s) of your intention to dissolve the partnership. Texas law does not require written notice, but it’s a good idea to document the notice in case there are any disputes later on.
3. Settle your debts and obligations.
Once you have notified your partner(s), you will need to settle any outstanding debts and obligations related to the business. This can include paying off loans, paying outstanding bills, and settling any legal disputes.
4. Divide assets and liabilities.
After settling your debts and obligations, you will need to divide the assets and liabilities of the business. If there is no agreement in place, Texas law requires that the assets and liabilities be divided equally among the partners.
5. File a certificate of termination.
Finally, you will need to file a certificate of termination with the Texas Secretary of State to officially dissolve the partnership. The form to file this certificate can be found on the Secretary of State’s website.
While dissolving a partnership without an agreement can be a challenge, it is possible to do so successfully with careful planning and attention to detail. By following these steps, you can ensure that the process is as smooth and straightforward as possible.
