I know that one dicey area to navigate in business is ending a partnership. If you’re just venturing into a partnership, you will come to realize this if it ever has to end. 

I’ve had to end some partnerships through my years of running businesses solo and with partners. I’ve decided to combine my experience with some research to make things easier for you.

In this article, I aim to show you how to end a business partnership without hassle. I also want to walk you through the various steps you must follow to ensure it ends smoothly.

How to End a Business Partnership 

The steps to end a business partnership include:

Two persons shaking hands
  1. Reviewing your partnership agreement
  2. Discussing the circumstances with your partner
  3. Completing dissolution paperwork
  4. Closing accounts 
  5. Announcing the change to relevant parties

Regardless of the situation or personal relationship between you and your partner, you must dissolve your partnership legally and thoroughly to limit your obligation under the partnership agreement.

Review the Partnership Agreement

The first step when ending a business partnership is to review your partnership agreement. This document is mostly unused in day-to-day activities. However, it contains the blueprint for untangling things. Go through the terms you and your partner initially agreed to. Do not make assumptions. Examine the agreement for details on duties and obligations, among other things. 

There is a strong possibility your contract includes a clause addressing what happens when you choose to to prepare for a successful business exit. Look for information on:

While this process may appear tedious, it beats being surprised later on.

Two women discussing to each other while looking on laptop on top of a stand on a table

The legal jargon in the agreement might be somewhat overwhelming. However, it will give you the clarity you need. Make sure you understand your responsibilities and the procedures you have to follow. If you find the agreement too technical to understand, consider consulting a lawyer, especially if a patent is involved with your dissolution.

Discuss With Your Partner

Next up, you want to schedule an in-person or virtual meeting. Be sure to keep the meeting as formal as possible. There is no need to use cryptic statements or skirt the issue. Just get to the point once you are past the pleasantries. You also want to avoid exaggerating the situation. Just stick to the facts, be straightforward, and keep things simple.

Keep in mind that the meeting is a two-way street. Encourage your partner to speak out. Foster an open environment that will welcome questions and concerns from your partner. Avoid the blame game. Your goal should be to understand each other, not assign blame.

Before you start the conversation, think about what you are willing to give up or accept to end the partnership, there are secrets to a successful business exit. This will help you prepare the groundwork for a more fluid discussion. Ensure you are both on the same page, whether buying out the other or shutting everything down.

Prepare Dissolution Papers 

After you have discussed this with your partner, you can proceed to draft a legal dissolution agreement. It will outline what each party will get and what each party is responsible for. As much as possible, keep it simple. There is no need for complicated language in this case. The simpler, the better.

Two men sitting on a wooden chair discussing while holding a tablet

Now, to the document’s content, you want to share information about assets, liabilities, and who is in charge of what. You want to ensure everyone receives a fair amount of the assets, liabilities, and responsibilities. This is where you have to get to business. Ensure you leave no stone unturned.

At this point, you want to be careful. It might seem simple; however, you should avoid preparing the dissolution papers yourself. Consult with legal professionals to ensure the strength of your paper, especially if it involves a Design patent or a Utility patent. While it may come at a cost, consider it a worthwhile investment.

Note State Laws 

It is important to note that your state’s laws will govern your partnership dissolution and it is important to file a statement of dissolution to your state within 90 days of the dissolution agreement.

Partnerships are often required to file dissolution paperwork with the state where the partnership is registered. This may involve filing articles of dissolution or a similar document. Each state has its filing requirements, and failure to comply may result in continued legal obligations for the partner. 

If there are disputes among partners during the dissolution process, the partnership agreement or state law may provide mechanisms for resolving these disputes, such as mediation or arbitration.

Close Joint Accounts and Resolve Finances

Work with your partner to shut those joint bank accounts in line with the dissolution documents. No partner should do this alone. You do not want any loose ends, so you want to work together on the closing, dividing, and transferring of the necessary monies. 

Do not be afraid to bring up the subject of debt. Face your unpaid bills and financial obligations head-on. Like every other bill, both partners must contribute. Put everything on the table, find out who owes what, and get it all straightened out. Gert any outstanding debt settled too.

To avoid wasting time, make a plan. Set deadlines for resolving your finances. Having a plan guarantees that you and your partner are on the same page when it comes to dividing assets or settling accounts. It will give you a clear roadmap of the journey ahead. Following a well-defined plan will help you maintain momentum.

A woman wearing an eyeglasses, sitting and working on a laptop with calculator and notebooks on the side

Communicate the Change to Stakeholders

Create a communication strategy. It will be like a mission briefing. You have to put out a strategy for informing clients, customers, and suppliers on the dissolution of your partnership. It is not about planning a surprise party. It is all about being open and honest. Who needs to know, and how will you inform the partner? Plan it out as early as possible and get started. 

Once you get started, avoid beating about the bush. Tell the truth about why the partnership is ending. Do not exaggerate the facts, and just stay truthful. It is a dissolution, and the stakeholders will value your honesty about the situation. They are not searching for a story. They simply want the facts.

Depending on your plan, you want to spell out the necessary certainties. Simply give the partner a firm resolve to move forward. Keep it authentic, and you are good to go.

Post-Partnership Dissolution Processes

After a partnership dissolution, several steps typically follow to wrap things up and move forward:

Asset Distribution

You must properly share the partnership’s assets per the terms both parties consented to in the dissolution agreement. This could entail selling assets, splitting the proceeds, or transferring specified assets to each partner.

Liability Settlement

Other than assets, you must settle all outstanding liabilities and debts. Partners are normally in charge of completing any remaining financial responsibilities of the partnership, whether it is repaying debts, paying off bills, or meeting contractual duties.

Employee Transition

If the collaboration includes employees, a strategy for their transition is required. This could entail amending employment contracts, issuing termination notices, or assisting staff in transitioning to new roles within the dissolved partnership or elsewhere.

Closure of Business Operations

If the partnership runs a business and you plan to end the business too, you must take action to wind it down or transfer the activities. This may include closing physical sites, ending leases, and settling any outstanding business contracts.

Two persons standing and signing some documents

Tax Considerations

You should also consider bringing financial advisers and tax advisors on board. They will help resolve the tax considerations of the dissolution. This includes completing the partnership’s last tax returns and settling any tax issues that may arise from the dissolution.

Related Questions

Why Should I Review the Partnership Agreement When Considering Dissolution?

The partnership agreement is the governing document for your business relationship. By reviewing it, you will receive insight into the agreed-upon terms, duties, obligations, and dissolution procedure. This proactive step reduces misconceptions, establishes expectations, and gives a clear roadmap for managing the intricacies of the partnership’s termination.

Do I Need a Lawyer to Draft the Dissolution Agreement?

No. You do not. However, while it is not required, hiring a legal professional is strongly recommended. An attorney can add significant knowledge to your divorce agreement, ensuring that it is comprehensive, legally solid, and tailored to your individual case. This protects your interests and helps to avoid future legal issues.

How Do I Communicate the Partnership Dissolution to Clients and Stakeholders?

A well-thought-out communication strategy is essential. Determine who needs to be notified – clients, customers, suppliers, and so forth. Avoid unneeded drama by clearly articulating the grounds for the partnership’s termination. Assure stakeholders of the continued availability of services or products by emphasizing openness.  


Without a doubt, the best method to end a business partnership amicably is to plan ahead of time and incorporate reasonable terms in the partnership agreement. However, this is not always the case, and many business partnerships fail due to a lack of sufficient agreement. In any case, you should seek experienced legal assistance early in the process. Next time, you might want to know how to create the right business partnership.