How to Liquidate a General Partnership

How to Liquidate a General Partnership

When you see no other way of running your company in a general partnership, it is better to liquidate it to stop the situation from getting worse for you.

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Liquidation of company

When you sell the assets of your business so that you may pay the outstanding debts and bills of the company, the process is referred to as liquidation. The assets which are remained behind are divided in all the partners equally.

When is a partnership formed?

A partnership is formed when two or more than two people set up a business. All the people concerned in a general partnership are liable for all the business debts on their own. This is why when the company gets in so much debt, it goes for liquidation.

Steps of company dissolution

Step 1

Review the agreement of partnership

This will give an idea about the way of dissolution of the company. This will also show how the income will be distributed among the partners. It provides a good guide for the process of Liquidation and Deregistration of Company.

Step 2

File the documents of dissolution with the state

Cancel the business name under which your company or brand was working. In some states, the documents might not be necessary but in some, it might be mandatory.

Step 3

Cancel all the permits and licenses of business

You must contact the departments from where you acquired the permits so that they may cancel your licenses and permits.

Step 4

Pay the paychecks to the employees

Pay the final wages to the employees before dissolving the company and make sure that you pay your employees before your last working day to comply with the laws of your state

Step 5

Settle all the debts

By the assets you sell, settle all the debts and give them back to the creditors. If the partnership itself is notable enough to pay the debts, the assets of the partnership should be sold at first so that the income may be generated.

Step 7

File tax returns

Different states have different tax returns filing systems. So, you must check them before filing for the tax returns.

Step 8

Close the business accounts

Close all the accounts of the partnership along with that of the credit cards.

Step 9

Maintain business records.

Do not forget to maintain the records of the company from the start to the end. Also, make sure that you keep this data save for almost 3 to 7 years.

Carry out all the above procedures but if you feel stressful already because of the liquidation procedures, you can take the services of professional liquidators. They will carry out all the procedures of liquidation for you which will save you from any stress regarding the lengthy liquidation procedure.

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