Dissolution of a partnership
Dissolving a partnership is a significant decision that will affect both you and your partner/s.
When can a partnership be dissolved?
Generally a partnership can be dissolved if all partners agree to the decision, or in the following circumstances:
- It has become illegal (for example, if a partner can no longer legally own a business).
- A partner gives written notice to the other partners.
- A court order requires the partnership to end.
- The life of the partnership has expired.
- Any partner dies or becomes bankrupt.
What should we consider once we have agreed to dissolve the partnership?
Once you and your partner/s have agreed to dissolve the partnership you need to consider the following questions:
- Will the business continue to operate once the partnership is dissolved? If so what will be the new business structure?
- If the business will continue to operate, have the new owner/partners applied for a new ABN and GST registration?
- Does the partner selling their interest have CGT to pay?
- If the remaining partner/s will acquire the leaving partner's interest do they need to pay transfer duty
- Have you closed the partnership books and completed a final tax return and BAS?
- Have you closed the partnership bank account?
- Are there any other personal or business related accounts and loans that will be affected by the change in business?
- Have the insurance policies been cancelled?
- Have you notified all of the relevant parties? This could include signatories of any ongoing contracts, the bank, customers, the landlord, debtors, creditors, local council, regulators…etc
- Have you updated, canceled or transfered your business name with Australian Securities and Investments Commission
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