Ending a Partnership in Illinois

By Holly Cameron

A partnership is a legally recognized business entity having at least two separate partners. Most partners sign a written partnership agreement to formalize their rights and obligations. Chapter 805 of the 2010 Illinois Code contains the Uniform Partnership Act of 1997 and sets out the relevant laws for forming, operating and ending a partnership. The repercussions of ending a partnership vary according to the size of the business, the financial position of the business and whether or not the partners can reach an amicable settlement.

Events Causing Dissolution

According to Section 901 of the Uniform Partnership Act, a partnership is dissolved if all the partners agree on its dissolution, or if an event occurs that makes it illegal to continue the business, for example, the outbreak of war. If the partnership was formed for a specific term or for the purpose of completing a particular purpose, it will dissolve upon either the completion of that term or the fulfillment of the purpose. Partners can petition the court for judicial dissolution if they are unable to reach agreement on essential issues and as a result cannot carry on the partnership business.

Statement of Dissolution

Once the partners agree on dissolution, a partner may file a statement of dissolution with the Illinois Secretary of State confirming that the partnership is winding up its business. This statement serves as notice to any former clients or business associates of the partnership. According to Section 805 of the Uniform Partnership Act, anyone who formerly dealt with the partnership is deemed to have notice of the dissolution after 90 days from the date of filing of the statement of dissolution.

Protect your loved ones. Start My Estate Plan

Settling Debts

When a partnership winds up, it must initially use its assets to pay any and all debts due to its creditors. If the assets are insufficient to settle all debts, each former partner is personally liable to the creditors. If any assets remain after payment of all debts, the former partners are entitled to a share of any remaining assets in accordance with their rights under the partnership agreement.


Partnerships in Illinois must file File IL-1065 – Illinois Partnership Tax Return – on an annual basis while they are still operating. If a partnership ends, it must make contact with the Illinois Department of Revenue to discuss its tax liability. It should also file a final tax form, specifying that it is a final return by checking the appropriate box.

Protect your loved ones. Start My Estate Plan
California General Partnership Law


Related articles

Delaware Limited Partnership Law

Limited partnerships, or LPs, are governed by the Limited Partnership Act in Delaware. This act authorizes the formation of a partnership with at least one general partner and additional limited partners. While the general partners remain personally liable for the debts of the business, limited partners are liable only up to the amount of their financial investment. To form, operate or dissolve an LP in Delaware, you must observe all state guidelines and filing requirements.

What Is the Difference Between Filing As a Partnership or a Corporation?

An important part of running any business is settling its federal tax responsibilities. The choice of business organization significantly influences how the business is taxed and how much it may have to pay. A corporation is an entity in which the owners are generally not personally liable for the business’s obligations. A partnership is a collection of individuals that come together, in which some of the partners are personally liable for the business’s obligations. As a result, these entities are taxed differently and have different IRS filing requirements.

Comparison: LP and LLP

When forming a new business, it is important to select an appropriate business structure. You may consider a number of factors, such as the length of the business venture, the nature of the business and the level of involvement by the investors. Partnerships are a common option because they are relatively simple to set up and allow for a variety of management structures. A partnership may be formed as a general partnership, limited partnership or limited liability partnership.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help. Wills & Trusts

Related articles

Steps for Dissolving a Partnership in South Carolina

Knowing the process for ending a general partnership can help partners effectively wrap up business affairs when it ...

How to Set Up a Partnership in Virginia

Partnerships are a common business type because they are relatively simple to set up and allow for flexibility in ...

General Partnership Laws & Regulations

A partnership is a form of business entity owned by more than one partner. The key consideration is that the business ...

Dissolving Limited Partnerships

The laws of each state govern the creation and dissolution requirements of limited partnerships that operate within its ...

Browse by category
Ready to Begin? GET STARTED