DISSOLUTION OF PARTNERSHIP FIRM

A Partnership business is a business model in which at least 2 or more individuals manage and operate a business based on the terms and conditions set in Partnership Deed. Partnership registration is usually used by small and medium scale businesses.

However, in future, a time will come when the partners decide that they want to stop this partnership firm or one or more of the partners will plan on leaving the partnership. The process when partners decide to stop the whole partnership firm is known as dissolving a partnership firm and the process when a single or multiple partner wishes to leave the partnership is called dissolving a partnership. In the process of leaving or closing off the firm the partners transfer the profit or loss based on the ration mentioned in partnership deed.

Also, when the partners plan to dissolve the partnership firm - they need to take care of all liabilities as well and assets should be transferred and managed among themselves. They had to settle every account that are accounted with the partnership firm.

There are different ways of dissolution of partnership firm, some of them are as follows:

1) Dissolution by Agreement : This is the case when all partners of the partnership firm mutually agree for the dissolution of the partnership firm
2) Compulsory Dissolution : This is the case when the firm becomes illegal because of any reason or for some event it becomes unlawful for the firm to carry on its business.
3) Dissolution by Court : It is the case when someone sues the partnership firm, it can also be a partner. And, for some reason, the court felt that the partner was not fit to run the firm or was guilty of some misconduct or malpractice.
4) Dissolution by Notice : This process is conducted when the partnership is at will. If one partner send a notice in writing to other partners regarding dis-solution.