In today's Freedom Friday blog and email newsletter, I want to once again continue from where we left off in last week's Freedom Friday blog and email newsletter.  Last week I talked about how to avoid business partnership disputes.  Unfortunately, however, disputes are very common in business partnerships (and in multi-member LLCs), and sometimes despite one's best efforts, dissolution of the partnership (or the LLC) is the best thing you can do for your small business.  So, in today's Freedom Friday blog and email newsletter, I'm answering the question, “What are reasonable grounds for partnership dissolution?”

Here are four (4) reasonable grounds to dissolve a business partnership:

1.   You Are Considering Suing Your Business Partner

The first reasonable grounds to dissolve a business partnership is that you are considering suing your business partner.  If you're considering suing your business partner for any reason, you should consider dissolving the business partnership because most business partnerships (or LLCs) won't survive the process of business litigation when it's based on a partnership or co-ownership dispute.  Also, even if you do not dissolve the business partnership, your partner or co-owner will if you decide to sue.  However, business litigation of this kind should still be a last resort and only after you try to resolve the issues through mediation and/or arbitration.

2.    Your Business Partner Has Breached the Contract

The second reasonable grounds to dissolve a business partnership is that your business partner (or co-owner) has breached the contract.  The partnership agreement (or operating agreement for an LLC) that you made when you started the company is a contract.  If your business partner or co-owner isn't fulfilling their obligations under that contract, it may be time to leave the business partnership.  Usually, it is worth your time to try to repair this type of breach of contract before dissolving the business altogether, especially if the breach is not intentional.  However, if you've already attempted to repair the breach and failed, dissolving the business partnership will prevent the breach from getting any worse.

3.    Your Business Partner Has Violated the Law

The third reasonable grounds to dissolve a business partnership is that your business partner (or co-owner) has violated the law.  If your business partner is engaging in illegal activity, their actions could put you in legal jeopardy because of your partnership contract.  In such a case, dissolving the business partnership is the best way to protect yourself from such criminal conduct.  The moment you suspect your business partner (or co-owner) is breaking the law, you should contact a criminal defense attorney and also a business attorney.  Proceeds from criminal conduct are often forfeited to authorities, and since your finances are mixed with your business partner's, you will lose out if you don't protect yourself right away.

4.     You Are No Longer Compatible With Your Business Partner

The fourth reasonable grounds to dissolve a business partnership is that you are no longer compatible with your business partner (or co-owner).  Even if you got along with your business partner (or co-owner) for years, if you're no longer getting along for any reason, it may not be worth it to continue the business partnership relationship.  It isn't worth it if you're trying to maintain a business partnership if you can't have a discussion with your business partner without a fight. If you're sparring as such continually, this will negatively impact the morale of the business, especially your employees.  You can do better financially by making your own decisions rather than by arguing about them with your business partner.  If you and your business partner (or co-owner) are fighting regularly, it may be best to dissolve the partnership.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/