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All partnerships dissolve at some point, either because of a dispute, retirement, death, or other circumstance. A partnership may also need to be dissolved if the partners decide to incorporate their business, or form a limited liability company.
When operating as a general partnership in California, each of the partners are open to unlimited personal liability from the acts of each of the partners on behalf of the partnership. Under the California Revised Uniform Partnership Act (RUPA) each partner not only has an equal right to manage the business of the partnership, but also the ability to unilaterally bind the partnership. If a partner incurs a debt or signs a commitment on behalf of the partnership, each of the partners is personally responsible and liable for the debt, commitment, and decisions made. In other words, the act of one partner, with or without the consent of the other partner(s), will bind the other partners and the partnership itself. Because a partnership does not provide personal "limited liability protection," general partners are personally liable, jointly and severally, for partnership debts, obligations, and liabilities. Consequently, the debts and liabilities of the partnership are the debts and liabilities of each partner.
To eliminate this open ended potential for liability many partners will close down the business, either permanently or to form a California corporation or California limited liability company. Before incorporating a partnership, however, the partnership must begin the dissolution process.
To dissolve a California partnership, the partners must: (1) file a statement of dissolution, (2) inform all known creditors, vendors, suppliers, and customers that the partnership is being dissolved (and if applicable that a new entity is being formed); and (3) publish a specific legal notice in a paper of general circulation for 12 consecutive days. As soon as the above paperwork is properly filed and published the world is on notice that partnership is being dissolved, that the partners no longer have any authority to enter into binding contracts on behalf of the partnership, and unknown creditors will have 90 days to make any potentially unknown debts known.
To determine who must receive a written notice that the partnership is being dissolved, the partners should examine the partnership's accounting records, contracts, leases, and any loan agreements.
There are no special tax consequences when a general partnership dissolves unless the partnership owns property that has appreciated in value.
By having your partnership dissolution handled by a California business attorney you lessen the likelihood that creditors will come back at some point in the future and try and hold you personally responsible. Let the Law Office Of Melissa C. Marsh assist you in closing down your California general partnership, forming another legal entity like a California corporation or California LLC, or simply provide you with strategic business advice to grow your business. We can prepare your agreement to dissolve, a notice to known creditors for you to mail out, a notice to be published in a paper of general circulation for 12 consecutive days to unknown creditors, and prepare and file the Statement of Dissolution with the California Secretary of State.
If you just have a few questions about dissolving a partnership, or converting to a corporation or limited liability company, please schedule a low cost telephone consultation. If you would like assistance to dissolve your California partnership, please call Melissa C. Marsh at 818-849-5206 or Send an E-mail .
California business lawyer, Melissa C. Marsh, is based in Sherman Oaks and West Hollywood, and serves individuals and businesses throughout Los Angeles County, including: West Hollywood, Miracle Mile, Beverly Hills, Century City, Santa Monica, Burbank, North Hollywood, Valley Village, Toluca Lake, Studio City, Sherman Oaks, Van Nuys, Encino, and Woodland Hills.
© 2009 Melissa C. Marsh. All Rights Reserved.
Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.
Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.