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Preparing now for the dissolution of a business

You finally got your business up and running, and everything seems to be going as smoothly as possible. Perhaps you are even turning a profit. As you adjust through the growing pains and ease into a routine, you may be relieved to have your success confirm what you always knew – that you were meant to run your own company.

With everything going well, you may not want to think about the possibility of having it all come to an end. In fact, you may not be able to imagine any reason for your business to close. Your partnership is solid, your clients are happy and your personal life is good. What could go wrong?

You and your partner

Just as people make final arrangements when their bodies are healthy, so many owners of healthy companies prepare for contingencies that may bring about the dissolution of their business. Unpleasant as it is to consider, there are countless reasons why businesses dissolve, not the least of which is the possibility that you or your partner may simply decide to try something different.

In fact, while you may feel comfortable as an entrepreneur, you have little control over your partner's feelings. Quite a bit can go wrong in a partnership, especially if there is no partnership agreement to direct disputes or clashes of management style. Of course, if your partner experiences financial struggles, marital problems or health issues, you don't want to be shocked and unsure what to do with the business if he or she backs out.

Other reasons for dissolution

Probably the most common reason why businesses dissolve is that they stop making money. However, there are other problems that may spell the demise of a once successful operation, including:

  • Poor accounting
  • Lack of vision
  • Mismanagement of production, purchasing or staff
  • Product liability lawsuits
  • Bankruptcy

Failure to comply with state or federal mandates, including taxes, health codes or OSHA regulations, may result in a government agency shutting the business down. Even a temporary closing may cause financial devastation as well as potentially damaging your company's reputation.

Leaving nothing to chance

If the time comes to dissolve your business, you may feel disappointment or even heartbreak over the situation, but one thing you probably want to avoid feeling is regret. No matter the reasons for closing your doors, having a solid strategy ahead of time can prevent many of the complications that may accompany the dissolution of a business.

Without following the appropriate steps, you may leave yourself, your partners and potentially your family open to future liabilities and other unresolved issues. To avoid this, you may find it helpful to obtain an experienced legal perspective to minimize the negative impact of any ongoing or future disputes concerning your business.

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