Florida Partnership Agreement
Just like with most matters that affect a partnership, the initial step in dissolving a partnership is checking a partnership agreement. Though a Florida partnership agreement should not necessarily be written, partners should draft one. If the partners do not have an initial Florida partnership agreement, they can fall back on the default provisions of partnership laws.
Along with reviewing a Florida partnership agreement, it is a great idea for all the partners to deliberate on the dissolution. The two main point of address include:
- Payment of outstanding debts of the partnership.
- Sharing of the remaining assets of the partnership.
A well-drafted Florida partnership agreement should offer guidance on the preceding points. One may also be able to simply follow the stipulations of the agreement. Contrariwise, there may be cases where one may want partners to pay certain debts and the responsibility is not covered by the Florida partnership agreement. If so, the partners will have to agree on who will cater for what and put the agreement in writing.
Taking a vote or action of dissolution
If there exists a Florida partnership agreement that has provisions on dissolution, partners should abide by the provisions. In most of the cases, the dissolution provisions of a Florida partnership agreement provide that all or most of the partners should consent before the partnership is dissolved. In such instances, one should have partners that vote on a resolution to dissolve the partnership. Thus, there will be a majority or unanimous consent that is required by the Florida partnership agreement. The voting results of the vote should thus be recorded.
If the partners desire to dissolve the partnership owing to disagreements, the partners have various options. First, the Florida partnership agreement may provide for a solution. For instance, there is an option for the partners that desire to progress with the business to buy out one or more partners that want out. Further, the partners could bring in an independent mediator to aid in the resolution of disagreements. Eventually, if the partners fail to agree after attempting all the options, the partners fall back on going to court and have it determined on the procedure of the dissolution. Moreover, the partners should avoid going to court, but if the worst comes to the worst, the partnerships could select competent lawyers to represent them.
If the partners have no Florida partnership agreement, they will have to rely on the Revised Uniform Partnership Act. Generally, the Act provides that any at-will partnership will be dissolved if any of the partners decides to leave the partnership. This is unless the remining partners elect to proceed with the partnership without the dissociated partners.
Filing forms with the state
In Florida, general partnerships are not required to be filed with forms upon their dissolution. Nonetheless, to aid in making things clearer for the partnership and limit liability, it is best if partners did so. Hence they should file a Statement of Dissolution with the Department of States’s Division of Corporations (DOC). The Statement of Dissolution should provide the name of the partnership and state that it has dissolved and is about to wind up the business. Further, the form should be typewritten and printed legibly in English. Moreover, the statement should be signed by the partners or other authorized persons. The individual that files the Statement of Dissolution should promptly provide partners not involved with filing with a copy.
Paying debts and distribution of assets
After the partners have votes to dissolve the partnership under the rules of the Florida partnership agreement, or in the absence of one, the partnership is dissolved under the Partnership Act rules. The partners also need to take extra steps to dissolve the agreement. Such include completion of any partnership work that is in progress, selling some or all the assets, payment of debts, and distribution of the remaining assets to other partners. Generally, the steps include:
- Completion of any partnership projects
- Selling some or all of the assets
- Payment of debts
- Distribution of the remaining assets to the partners
It is also important that all the debts are settled before they are distributed among the partners. The Florida Partnership Act provides rules in which people are paid when winding up a partnership. Generally, creditors should be paid first then the partners share out the remaining amount as per their capital contributions. Eventually, if anything remains, the partners are entitled to distribution. All the preceding should be expressly outlined in the Florida partnership agreement.
Notification of creditors, clients, and suppliers
While there is no legal requirement, partners should notify the creditors and customers that the relationship is being dissolved. In some instances, if one of the partners makes a deal with someone after dissolution, the partners could be on the hook for the deal. Such includes the debts that are involved. This happens if the partners did not have notice of the dissolution. There are several options for how to grant people notice of the dissolution. One of them is sending written notifications that are written. Another suitable one is publishing a notice is in one of the local newspapers.
Final tax matters
Florida does not require signatories to a Florida partnership agreement to obtain clearance of tax before the dissolution of the partnership. Nonetheless, one must notify the Department of Revenue that they are closing the business. The Department of Revenue prefers that partners submit the information using the online system. Further, the system can be used to close the reemployment tax account, sales tax account, and other tax account that are business-related.
For the federal tax purposes, the final return box on the IRS Form should be checked. If the IRS rules terminate the partnership before the end of the normal tax year. Also, the final federal returns are due on the fifteenth day of every month after the termination date.
Out-of-state registration
The Florida partnership agreement should be registered or qualified to do business with other states. If so, the partners may file separate forms to terminate the right to conduct the business in the states. Depending on the involved states, the form may be termed a termination of registration, certificate of the existence of termination, application of withdrawal, or the certificate of surrender of the right to transact business. Further, failure to file extra termination forms denotes that one will continue to be liable for the annual report fees and minimal business taxes.
Florida partnership agreement lawyer
Partners are valuable in running a successful business. Nonetheless, even the most tight partnerships could view disputed and issues arising down the line. Though Florida does not require the adoption of a written Florida partnership agreement, the document is recommended to resolve future problems. Further, a Florida partnership agreement aids in preventing costly litigation by including alternative dispute resolution.
Further, before embarking a business venture with other people, a Florida partnership agreement lawyer should memorize the relationship terms. Thus, partners should hire an experienced Florida partnership agreement lawyer to secure the success of the company through creation of a well-tailored contract.
Important information in a Florida partnership agreement
A Florida partnership agreement could be implied, written, or oral. If the dela is not sealed in writing, the company should maintain a repository of key information at the designated office. Information to be included comprise:
- Names and addresses, alphabetically, of the general and limited partners.
- If a limited partnership, a copy of the certificate filed with the State Secretary and other amendments.
- A Florida partnership agreement should also include a copy of the information regarding the mergers and conversion. Such includes the plan that is adopted by the partners.
- Three years of tax returns for the limited partnerships.
- A copy of partnership agreements along with the years of financial statements. If the Florida partnership agreement relates to a limited partnership, a copy of annual reports of three years.
- All the consents and votes taken by the limited partners for three years.
- Without a Florida partnership agreement, the future contributions agreed on, any trigger to a dissolution event should be included.
It is thus apparent that it would be easier to adapt a Florida partnership agreement and circumvent some of the recording duties that are prescribed by law. Moreover, a written agreement could aid in counteracting that partner disputes that result from reminding every person of what they agreed on initially.
Elements of a Florida partnership agreement
A Florida partnership agreement should relate to the wishes of the partner and serve as a roadmap for running of the business. It should also include the names of the partners, future and initial contributions, and specification on whether they are general or limited partners. Further, the agreement should detail how they will split profits and losses, management of the entity, guidelines of voting, resolution of disputes, and if an how the new partners will be admitted.
References
https://www.lieserskaff.com/business-law/tampa
https://legalcontracts.com/legaltemplated/partnership
https://www.360legalforms.com/partnership/agreement
https://www.uslegalforms.com/florida/partnerships
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