Most multi-owner businesses start with a shared vision, passion, and aspirations for success. However, despite everyone’s best intentions, not all business ventures are destined to thrive or survive. Conflicting goals, shifting priorities, and different management styles can slowly strain and erode a collaboration. External factors, like market shifts and financial constraints, may come into play as well.
Regardless of the reason, when one or both owners decide it’s time to dissolve the business venture, it can be an emotionally charged and legally complex undertaking. Working with a Business Law team from a qualified firm like Cobb Cole that understands the dynamics involved can help you navigate the process as smoothly as possible, minimizing disruptions while protecting your interests.
Dissolving a Business Venture: Softening the Blow for Everyone
Some business ventures just aren’t meant to last. One owner might want to retire. Sometimes, an owner dies. If the owners are friends or have developed a close relationship over the years, parting ways could almost be like a divorce, including significant emotional and financial impacts to both parties.
While many business ventures end amicably, others are more contentious, particularly if one owner is opposed to the dissolution or how the dissolution should occur. This can make it difficult to reach a fair resolution. If you’re ready to sever the ties with your business partner, simply “walking away” isn’t a good idea, and is generally not allowed in the eyes of the law.
To avoid having problems come back to bite you further down the road, consider these tips for terminating a business venture with minimal stress and expense.
- Review your organizational documents. Hopefully, the business was launched with a valid shareholder, operating, or partnership agreement that set out an exit strategy detailing what each party must do should one or both partners decide to end their association. The agreement should contain a consensus on issues like how business assets will be disbursed, how customers and clients will be notified, and how accounts will be managed. If there is no such agreement or such provisions in the agreement, you can either agree on terms and put them in writing or consult with a business law attorney to see what the requirements are for closing down a business in Florida (see below).
- Check your ego. Resolving business disputes through litigation should be a last resort, as it’s typically a lengthy and expensive process. Objectively consider if it’s worth your time and money to go to court or whether it’s better to try to negotiate an amicable agreement through talks or the mediation process to conserve your resources. Think of it this way: do you want to spend more money getting the result you want, or would you rather work toward getting a result you can live with?
- Discuss options with the other owner(s). Unless there’s no chance of having a rational discussion, sitting down with your business partner(s) to talk about an amicable solution can be beneficial. The goal should be to look for opportunities where you can help each other move on and pursue new goals instead of sabotaging one another.
- Keep customers and clients in mind. The people who supported your business still have important needs, even if you’re in the middle of winding down your business. Not only do you want to protect your professional reputation, but it’s also the right thing to do.
- Consult a Business Law attorney. A business lawyer protects your interests and can become a crucial resource and advocate.
How Businesses are Dissolved in Florida
Florida business entities include LLCs, corporations, sole proprietorships, and partnerships, each with its unique legal structure and requirements both in setting up and dissolving. In each scenario, you will need to:
- Marshall all assets.
- Liquidate assets if necessary to satisfy liabilities.
- Settle all outstanding liabilities.
- Accrue funds for contingent or unknown liabilities.
- File tax returns and pay any federal or state taxes due to obtain “tax clearance.”.
- Notify third parties, such as customers, employees, vendors, and creditors, with an interest in the business’s dissolution.
- Cancel and close accounts, licenses, permits, and registrations.
- Distribute remaining assets to owners.
Dissolving a business venture can be a long process with many tasks to complete. A knowledgeable business law attorney can advise you on the process and assist you in complying with Florida’s statutes.
Getting Help With Ending Your Florida Business
Ending a Florida business can be complex, making it helpful to seek guidance and assistance from a qualified business law attorney. If you’re ready to move forward with a business dissolution, contact the Business Law team at Cobb Cole today. We’ll help you determine the best steps forward, regardless of whether you have a shareholder, operating, or partnership agreement. Our skilled attorneys have been providing professional legal services for nearly a century to Florida businesses.
Contact us online or call 386-255-8171 to learn more about what we can do for you.
