A well-drafted business agreement for founders of a business, can reduce stress when it comes time to separate later, if it contains the appropriate separation provisions. It also can help save personal relationships of the founders, that are vulnerable during times of business dissolution.
Include provisions for separation before the start of business operations, when everyone is excited about the opportunity and more agreeable than during a business dissolution.
The process of separation or business dissolution will vary, depending upon how the business is structured and agreements between the partners, members, etc.
First, gather your professionals, that is, a qualified business lawyer and business tax professional to help you with reducing risks, transferring property (real property, equipment, intellectual property, trademarks, etc.), winding up the company, tax return, etc.
Obtain legal counsel before dissolving any entity or partnership and learn about how liabilities follow assets. It may be advisable to not dissolve the entity or partnership until certain conditions exist. Business operations can cease without dissolving the entity or partnership.
Generally, the steps are as follows, when considering ending or dissolving a business:
1. Gather your professionals (legal and tax).
2. Have a qualified lawyer provide advice concerning your options in separating, terms of Separation Agreement, etc.
3. Have a qualified business lawyer provide advice concerning dissolving the entity or partnership, in relation to timing, liabilities, etc.
4. Seek tax advice from a qualified tax professional.
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For more information, contact Business Lawyer, Michelle DelMar, Esq. Click here.