Dissolution of firm

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Sunil (Querist)
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15 February 2012 Dear Sirs

Can any one explain the step by step procedure to dissolve a firm on death of the partner. (firm is stopping its business)

Thanks in advance

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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17 February 2012 1. Take steps to end the partnership quickly once the decision is made. Refer to the partnership agreement for necessary actions to end the agreement. State laws govern most partnership agreements. Remember that in the event of the death of one partner the partnership is immediately dissolved.

2. Review a list of all partnership creditors. Notify the creditors that the partnership is being absolved by notice to the state. Any outstanding claims must be resolved by the cash or profits of the company or by the partners themselves. When notifying customers and vendors of the dissolution. tell them whether there will be a new form of operation.

3. File notice of dissolution with the state as soon as possible. There will be a waiting time under which the partnership is deemed to be active but in process of dissolution. After this period, usually 90 days, the partnership is deemed to have ended and knowledge of the partnership has been made public to all. Therefore, no additional claims against the partnership may be created.

4. Acknowledge long-term contracts still in effect. If contracts were signed for services that extend beyond the termination of the partnership they must be honored. It is important to negotiate an end to the service or set aside monies to continue to pay for the contracted services. Otherwise, partners may be liable as individuals for outstanding sums of money.

5. Hire a lawyer to review the dissolution actions you have taken in case any important details or procedures were not properly completed. This is particularly important if the partnership does not have sufficient assets to redeem all debt and the partners must use their private capital to conclude matters.

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