How to Dissolve a Partnership in Florida

It's not always sunny in the Sunshine State. Going through the process of dissolving and winding up a business can be a bleak task—but it's a necessary one. If you've decided that your business has run its course and it's time to cease operations, then you'll need to take steps to formally end your partnership (also known as a "general partnership").

Following your partnership agreement, Florida partnership laws, and best practices can help limit your liability during the closure of your business. For general guidance, see our article on dissolving a partnership to end your liability.

Table of Contents

• Review Your Partnership Agreement
• Take a Vote or Action to Your Florida Partnership
• No State Filing Required to Dissolve Your Partnership in Florida
• Pay Debts and Distribute Assets to Wind Up the Partnership in Florida
• Notify Creditors, Customers, Clients, and Suppliers
• Pay and File Final Tax Returns With Florida
• Cancel and Close Accounts, Licenses, and Permits

1. Review Your Partnership Agreement

The first step in dissolving your partnership is to check your partnership agreement if you have one. Many partners draft a partnership agreement when they form their partnership. If you never created an agreement or your agreement doesn't include dissolution provisions, then you'll need to follow the default rules and procedures set out in Florida's Revised Uniform Partnership Act (RUPA).

Your partnership agreement should provide a procedure for how to end your business, including the vote required to dissolve and the forms you should file with the state. It should also give instructions for how your partnership should handle its assets, including:

• selling off ("liquidating") the assets
• using the assets to pay the partnership's debts, and
• dividing any remaining assets among the partners.

Your partnership agreement should cover most, if not all, matters related to dissolution. But if anything isn't covered, you and your partners should come to an agreement about how to proceed. You can amend your existing agreement or draft a partnership dissolution agreement to cover these additional terms.

2. Take a Vote or Action to Dissolve Your Florida Partnership

If you have a partnership agreement with dissolution provisions, you should follow what's laid out in the agreement. Usually, partnership agreements provide multiple methods for dissolving a partnership, such as:

• a vote by the partners at a meeting, and
• written consent by the partners without a vote or meeting.

Your agreement should provide a minimum threshold for passing the resolution to dissolve the partnership. For example, your agreement might require half, two-thirds, or all of the partners to vote in favor of dissolution for the resolution to pass. The threshold you choose might depend on a number of factors, including:

• the number of partners in the partnership
• the method of dissolution (a vote at a meeting versus written consent), and
• state law.

If you don't have a partnership agreement, then you'll need to follow the default rules in Florida's RUPA. In Florida, a partnership can be dissolved if any partner decides to leave the partnership unless the remaining partners elect to continue the partnership without the disassociated partner. (Fla. Stat. § 620.8801 (2023).)

Under Florida law, a partnership can continue when one or more partners want to leave. Partnership agreements often provide partners with the same option. Partnerships can include buyout provisions—also called "buy-sell provisions"—in their partnership agreement that define when a partner's share can be bought out, for how much, and by who. If you don't have a partnership agreement or your agreement doesn't include these provisions, you can negotiate a separate buyout agreement.

3. No State Filing Required to Dissolve Your Partnership in Florida

Florida doesn't require partnerships to file any forms with the state when they dissolve. General partnerships are considered "unincorporated" so you don't need to file a form with the Department of State (DOS) to create or end your partnership.

Though not required, it's still a good idea to file a Statement of Dissolution with the DOS's Division of Corporations (DOC). Filing this dissolution document can limit your liability and make it clear your partnership has ended. Specifically, the Statement of Dissolution cancels a filed statement of partnership authority and limits the partners' authority to bind the business to transactions, like selling the partnership's real estate. (Fla. Stat. § 620.8805 (2023).)

You can only file this form if you've already filed a partnership registration with the DOC. In your Statement of Dissolution, you'll need to provide:

• your partnership's name, and
• a statement that the business has been dissolved and is winding up its business.

You'll need to give the partners copies of the filing as well. Under Florida law, other people generally are considered to have notice of the partnership's dissolution 90 days after filing the Statement of Dissolution. (Fla. Stat. § 620.8805 (2023).)

As of 2023, the filing fee is $25. You can find general partnership forms for download on the general partnership forms section of the DOC website. You'll need to mail the completed form to the DOC.

4. Pay Debts and Distribute Assets to Wind Up Your Florida Partnership

After the partners have decided to dissolve the partnership and you've filed the appropriate forms with the state, you can begin winding up the business. To wind up the business, you'll need to:

• complete or assign any business contracts that are in progress
• sell the company's physical assets, including real estate property, vehicles, equipment, furniture, and inventory
• notify creditors and others about your partnership's dissolution
• negotiate and pay your partnership debts, and
• distribute remaining assets, if any, to the partners.

You'll need to pay all debts before dividing the assets among the partners. Florida's partnership law has rules for what order people must be paid in when winding up a partnership. In general, creditors, including partners who are creditors, must be paid first. Then any surplus must be distributed to the partners according to their partnership accounts. (Fla. Stat. § 620.8807 (2023).)

A partnership account (also known as a "capital account") reflects a partner's running balance with the partnership based on how much the partner contributed to and received from the partnership. So if the partner's balance is negative, they owe money to the partnership; if their balance is positive, the partnership owes them. (To learn more about capital accounts, read our partnership FAQ.)

For example, suppose Carlos and Sonia have agreed to dissolve their partnership. The business has $50,000 to distribute to the partners after paying creditors. Carlos has a balance of $30,000 in his partnership account and Sonia has a balance of $20,000. So, Carlos would get $30,000 of the partnership's $50,000 and Sonia would receive the rest. Carlos and Sonia's partnership accounts would reflect:

• their contributions to the partnership (for example, if Sonia had paid $10,000 out of her own pocket to help buy a company vehicle)
• their share of the partnership's profits
• the profits and losses from liquidating the business's assets (like profits from the sale of inventory and equipment), and
• any draws the partners took from their accounts over the life of the partnership (like quarterly distributions).

(Fla. Stat. § 620.8401 (2023).)

Your partnership agreement should determine each partner's share in the business's profits and losses. Usually, a partner's profit share is the same as their ownership interest in the business. If you don't have a partnership agreement or the agreement doesn't specify the partnership shares, then Florida law says that each partner is entitled to an equal share of the partnership profits and responsible for an equal share of the partnership losses. (Fla. Stat. § 620.8401 (2023).)

When the partnership is left with debt. After liquidating company assets and paying creditors, the partnership might not have any money left to distribute to the partners, or worse, it might owe money. In Florida, unless the partnership agreement says otherwise, the partners share equally in the debt burden. So, if you have $10,000 in partnership debt and two partners, each partner would have to personally pay $5,000 to cover the business debt.

Negotiating with creditors. When paying your debts, you should try to negotiate a settlement with your creditors for an amount that's less than what you owe. Limiting the partnership's debt means that the partners will have to pay less out of their own pockets—and it could even mean putting some money back into the partners' pockets. If you reach an agreement with any creditors, make sure you put the terms in writing.

5. Notify Creditors, Customers, Clients, and Suppliers

In Florida, you're not legally required to notify creditors or others about your partnership's dissolution. But it's a good idea to give notice anyway. For example, suppose that after dissolution, a partner tries to sign a business deal on behalf of the partnership. But the other party to the deal knows that the partnership has dissolved. In that case, the business deal likely can't be enforced against the partnership.

In Florida, filing a Statement of Dissolution provides notice of the partnership's dissolution to creditors (and anyone else) 90 days after filing. (Fla. Stat. § 620.8805 (2023).)

If you don't file a dissolution statement or want to provide additional notice, you can announce your partnership's dissolution in a local newspaper. You can also create a post on your company website or social media page. If you have any creditors, it's a good idea to reach out to them directly to let them know your business is dissolved.

Keep a record of these notices, including when and where the notices were posted.

6. Pay and File Final Tax Returns With Florida

In Florida, you don't need to obtain tax clearance before dissolving or winding up your partnership.

However, you must notify the Department of Revenue (DOR) that you're closing your business. The DOR prefers that you submit this information using their online eServices system. The system also can be used to close a sales tax account, reemployment tax account, and other business-related tax accounts. You'll need to be enrolled to use the system.

State personal income taxes. For tax purposes, partnerships are considered "pass-through entities." So, the business itself doesn't pay taxes. Instead, the income passes through to the partners, who report and pay taxes on their share of the profits. However, Florida is one of the few states that doesn't tax personal income. So the partners don't need to pay income tax.

Federal income taxes. For federal taxes, submit IRS Form 1065 and check the "final return" box. If your partnership terminates before the end of its normal tax year, the IRS requires you to file your final federal return by the 15th day of the third month following the termination date.

Other state taxes. While you don't have to pay income tax in Florida, you might be responsible for reporting and paying other business taxes. You can find information specific to different types of business taxes, including a link to frequently asked questions, on the taxes and fees or refunds section of the DOR website.

7. Cancel and Close Accounts, Licenses, and Permits

At this stage, you should've paid your taxes, settled your debts, and distributed any remaining funds to the partners. Your partnership's bank account balance should be at zero. It's time to close that account, along with any other open accounts under your partnership's name.

During your business operations, you might've been issued business licenses, permits, or registrations. You might be able to transfer or sell some of these licenses or permits. Otherwise, you should notify the appropriate state or local government to cancel them.

If your partnership operated under a fictitious name (also called a "DBA") and you registered that name, you should cancel that registration as well.

Getting Help With Ending Your Florida Partnership

Closing your business can be a long process with a formidable list of tasks to complete. If you want additional help sorting through the list of obligations, you can read our 20-point checklist for closing a business.

While the list of to-dos might be long, many partnerships can dissolve and wind up their businesses on their own. If you don't have many assets to sell, debts to pay, or tax forms to file, then you can probably terminate your partnership on your own. But there are some cases where you could need legal assistance, such as when you need help negotiating with creditors, settling disagreements between partners, or filing tax returns. If you need legal advice, speak with a local business attorney. They can help you dissolve and wind up your business—in a limited or complete capacity.