Legal Question in Business Law in California

Re: Business dissolution

Your question suggests that the business is organized as a general partnership, i.e., that it isn't a corporation or an LLC or perhaps something else.

All aspects of terminating a partnership are rather formally addressed by statute in California. It's in the Corporations Code, sections 16601 through 16807. First, there are some terms used in the law which can be misunderstood. These include "dissociation" "wrongful dissociation" "withdrawal" "winding up" "dissolution" and "termination." They all have different meanings.

Any partner has the power to withdraw from a partnership at any time without the approval of anyone else. Sounds like that's what you want to do. Voluntary withdrawal is a form of dissociation. Other forms or methods of dissociation include death, being kicked out for filing bankruptcy or otherwise, and so on.

A dissociation may be rightful or wrongful. It is wrongful if, for example, the dissociation breaches the partnership agreement (a partner may have agreed to stick with the partnership for ten years, or for life; he has the power to withdraw (as said before) at any time, despite his agreement, but in so doing he breaches the agreement). A wrongfully dissociating partner has fewer rights in determining what happens next.

After a dissociation, the remaining partner(s) can elect to continue the partnership business, or to wind it up. If they continue, they must buy out the dissociating partner or his estate. This involves an accounting and perhaps an appraisal.

If the remaining partner(s) elect not to continue the business, it must be wound up and its assets liquidated, its debts paid, and all partners share in the distribution of the leftovers in proportions specified by law, generally in proportion to their capital accounts in the former business.

The bottom line is that if you initiate the process, absent an agreement to the contrary, you will have little or no control over what becomes of the business or any of its specific assets such as the tax i.d. number, which presumably is the partnership's and not yours.

Re: Business dissolution

Reading between the lines, it appears that you wishh to kick your other partner out and keep using the business name. As my colleague correctly observed, terminating a general partnership is not as simple as it sounds.

As for keeping the tax ID, you can only do that if you were the person who signed the SS-4 form and if your SSN was used to set up the number.

A partnership dissolution should be done in consulation with qualified legal and tax advisors. Feel free to contact me if you require additional information or assistance.

Re: Business dissolution

As mentioned by previous two attorneys itis not a simple process. You can approach him first to buy him out or can file for partition suite.

Re: Business dissolution

That's fine. All you have to do is reach agreement with your partner [if a partnership] or your other shareholder [if a corporation], and do all the agreements, paperwork and notices necessary. However, your posting implies that you can't reach agreement. If he doesn't want to go along with this, that is, you can't buy him out, then you will either have to get involved in legal disputes and appraisals, or you will have to consider other options such as open a new business. Whether you need to, or will be able to, use the old tax ID depends on all the facts. An ID # is no big deal; a company name and good will is a big deal. Feel free to contact me if interested in getting help doing this.