In dissolving a partnership, the guiding document is the partnership agreement; it should be the first point of consultation. A number of steps must be followed to ensure that the partnership is in compliance with state law. All tax obligations must be met and all remaining debts must be addressed before the partnership is completely dissolved. It is essential to maintain records throughout the dissolution process, and to keep the records on file for three to seven years after the business is closed.
Consult the partnership agreement. If there is one in place, the partnership agreement may specify when and how the business will close, how the profits will be distributed, and what will happen to the assets of the business. Without an agreement, the business will dissolve when one partner leaves the partnership.
File a Statement of Dissolution with the Idaho Secretary of State, which you can download from the secretary's website or from a third-party legal document service. Fill out the form with the partnership name and date of dissolution. The form requires the signatures of two partners and a filing fee. Mail the form to the address on the form.
Cancel permits, licenses, and registrations. Contact the state or local agencies where the business or professional licenses were originally acquired, and request cancellation. Doing so will protect your finances and your professional reputation.
File a Cancellation of Assumed Business Name with the Idaho Secretary of State. If the partnership was doing business under an assumed business name, you should cancel the business name so it is no longer associated with the partnership. Download the form from the Secretary's website or a third-party legal document service, fill out the form, and send it to the address on the form with the appropriate filing fee.
Pay wages owed to any employees and pay business debts. Wages should be paid by the employee's final day of work. Settle all debts of the business. Notify all lenders and creditors that your partnership is closing.
File final state and federal tax returns. On Form 1065, filed with the IRS, and Form 65, filed with the state, indicate that it is your final return. Ensure that you are in compliance with any remaining tax obligations or debts, including sales tax, excise tax, and payroll tax, if applicable.
Distribute any remaining assets to the partners. Allocation of assets should follow the partnership agreement, if one is in place. If not, distribute remaining assets evenly among the partners.
Maintain records. The state and the IRS may request financial, tax or employee information three to seven years after dissolution.