Help Dissolving an LLC Is Here
“My Partner wants to dissolve our LLC. I want to continue the business. Can we dissolve the LLC and then I just start a new one? Easy?”
Chris Reich provides business partnership advice.
Dissolving an LLC Is Easy But…
You and your partner have decided that you no longer want to continue in business together. You have decided to dissolve the LLC but you want to continue in the same line of business using the infrastructure from the business you are closing. That can be simple but there needs to be a few steps taken to avoid liability.
Start with Full Disclosure
This kind of situation comes to me every day. Partners decide to fold up an LLC but one has the idea of bringing it back once free of the partnership. That’s unethical and violates the Partnership Fiduciary Duties. If the goal is to continue without your partner, you have a legal responsibility to disclose that to your partner.
Next, Follow ALL the Rules of a Proper Wind Down
If the intention is to dissolve the LLC, you start a legal process called a “wind down”. You wind down the business operation following a prescribed sequence. First, you must satisfy all the obligations of the business. Taxes need to be filed, bills paid, and any leases need to be satisfied or an exit negotiated. You must satisfy all the business obligations.
Next, you can liquidate the assets of the business. That means you can sell off anything of value. If all the liabilities are covered, including taxes for the current year, the partners can split up whatever is left.
One Big Decision Left
The last thing you’ll need to decide is whether any of the intellectual property can be used. Can a partner use the name to start a new business? Can a partner use a different name and keep the website? We have lots of project pictures. Can a partner use those pictures to promote a new business? This is where things can get sticky.
If the business is dissolving, all those assets should not be used. After all, we’d be merely changing the name if we keep the website and use the same promotional materials. However, if everyone agrees, one partner can rebrand and relaunch. But there needs to be a specific agreement about the use of ALL materials from the dissolved business. That’s a reason to have a professional help with working out the details.
More Partnership Questions?
Don’t hesitate to reach out to Chris anytime
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