Terminating the Partnership
What is winding up the business?
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How does a Partnership end?
In the absence of a written agreement, a partnership ends when a partner gives notice of his express will to leave (dissociate). When there's a written agreement, the partnership ends when an event outlined by the agreement occurs or when a majority of the partners decide to end the partnership after a single partner dissociates.
Why are Partnership agreements important?
Written agreements can be very useful in the termination of a partnership because they can outline a process to be followed. For example, the partnership can allow the remaining partners to continue the business if they agree to do so. Whether there is a written agreement or not, it's fairly easy to leave a partnership, though you'll still be responsible for obligations that the partnership incurred while you were there.
Terminating a partnership is more of a process than a single moment in time because there generally remains a business that needs to be wound down (i.e., debts to be paid, obligations to be fulfilled). Partnerships have the advantage of easily flowing profits into personal income and very easy formation, but also have the disadvantage of personal liability for business obligations. As a business owner, you'll have to weigh these factors and determine whether forming a partnership is right for you.