Streamline your tax compliance with our expert-assisted GSTR 9 & 9C services @ ₹14,999/-

Tax efficiency, interest avoidance, and financial control with advance payment @ 4999/-
Partnership Firm

Tips To Gracefully Part Ways With Your Business Partner

"When a person gets let go, nothing makes it worse than not getting honesty from someone they've fought with and endured hardship with. If you really care about the business, you'll often see reason. Tell them why you can't be a part of it anymore.."


In this era of specialisation, where everyone is trying to be a master of one, partnerships are becoming more and more common in business. It should be noted that association here doesn’t refer to a partnership firm or an LLP. It means any legal business entity formed with two persons or more. So it could be a company as well. Specialisation is the primary reason for more collaborative businesses because it allows several individuals with expertise in different fields to form a holistic administrative body that will work in the best interest of the organisation and its stakeholders.

But the dynamic between business partners is not just about the individual’s specialisations or skills. The dynamic and the rhythm between the partners also play a role in the smooth operation of the business. And when these factors go wrong, business suffers, and the individuals must part ways in the greater interest of themselves and the business as a whole. But the parting of ways can sometimes turn ugly and spiteful, leading to unnecessary waste of time and money.

In this article, we shall discuss a few ways to make this departure between partners amicable and avoid it from turning ugly.

Things To Keep In Mind

Defining Roles And Responsibilities

‘Prevention is better than a cure’ is a well-known adage. A clear and robust formal agreement with your partner(s) is a good way to prevent disruptions or disagreements during separation. This means defining the long-term roles and responsibilities of the partners. This makes it easier to show cause while dissolving a partnership. It becomes easier to put the finger on the problem if the separation is due to failure in meeting roles and responsibilities.

Defining Short-Term Goals

This is another way to check if the partnership is fruitful and functional. Setting short-term goals allow a partner to demonstrate their value to the business operation in terms of performance rather than merely displaying qualifications and experience. Short-term goals give tangible results which can be measured. The inability to meet these goals due to incompetence can project the non-compatibility of a partner with the vision of the business. It can help in dissolving the partnership amicably.

Defining An Exit Strategy

The partnership agreement must clearly and explicitly define under what circumstances a partner can be disengaged from the business and lay out the formal procedure to facilitate the dissolution of the partnership. It creates clarity right from the beginning, motivating partners to achieve their goals and perform their roles and responsibilities to the best of their abilities, as they are aware of the circumstances and actions that can lead to their termination from the beginning. This makes the separation easier and legally binding as well.

Leave Room For Discussion And Dialogue

Apart from taking all the legal measures available, it is also important to approach such sensitive matters as the dissolution of a partnership firm registration can cause financial and mental distress. And communication is the best way to relieve this kind of distress. Giving reasonable space and time to the partners to discuss the dissolution can help in a mutually respectful parting of ways where all parties walk away with their dignity intact.

Do Not Rush Into Judicial Solutions

Usually, when a partnership is on the verge of ending, tensions and emotions can fly high, leading to hasty and ill-conceived decisions. The most common solution during separation is a legal threat or legal action. This can cause a loss of time and money on both sides. So it is always better to give ample opportunity to resolve conflicts mutually before dissolving the partnership rather than rushing into the judicial process.

Get A Prenup!

Even though no one gets a kick out of the chance to consider a termination, or a disintegration, concurring on a walking-out plan should be a piece of the most punctual partnership talks. Regardless of how intense things get, you and your partner are secured and compelled to submit to terms. After that, you concur when a calm attitude wins.

Set Down Mutual Desired Outcomes

By and large, when a business partnership is reaching an end, the two parties have their motives. In case you can portray a lot of mutually desired outcomes and, at that point, work from a position of mutual decency, you can commonly locate an amicable solution to any business partnership that has come to the end of closing.

Split The Last Cheque

It costs hard-earned cash to break down an organisation. The legal expenses ought to be divided into equal and same ownership percentages. Even though an exit plan should have been recorded as a hard copy after beginning the business, a few business visionaries probably would have needed it. By splitting the expenses of dissolving the partnership, you, at any rate, have documentation demonstrating that the two parties consented to end the association.

Make The Contract Robust.

Having the correct contract set up toward the beginning of the business partnership is vital. That monitors terms of termination or breakup and clarifies the result for the business, the work, etc. Those are the things that create issues in any case.

Constantly Be StraightForward

Partnership breakup is, in every case, hard, yet it’s interminably progressively troublesome when there’s cash on hold. Sit with your partner and be straightforward. Discuss what’s up and why you cannot push ahead. Offer an arrangement to make the split work for both of you.

Plan The Approach Cautiously

It would be best if you thought a thousand times before you act. It would be best if you never ended a business partnership without giving it much thought. Consider things cautiously and plan your approach or case. Saying nearly nothing or a lot can have negative results later on.

Hire A Lawyer

Dissolving a business partnership can be difficult, so it is recommended to expel all feelings from the procedure. If you have the assets, the two parties should employ a lawyer when it is concluded that it is expected to close or break up an organisation. This enables both partners to consult at a manageable distance without hurting each other’s sentiments.

Find Mutual Advisers To Help

Whenever a relationship is finished, there is a characteristic pressure brought about by an absence of trust. However, much as could reasonably be expected, bring in common counsels to enable you to work through differences. Companions or counsellors whom the two parties trust will make a more secure condition for a talk, which will help lead to a smooth closing.

Convey Clearly

Convey everything clearly and discuss a lot. It is important to convey your objectives and method of reasoning with your business partner all through your partnership, much like a marriage. When there is transparency and straightforwardness between you and your business partner, both parties will know where the other stands. The end will probably not be a surprise or shock.


While it is common to say that business is just and not personal, it only sometimes works that way with everyone. People put their hard work and time into a business with the expectation of a reward. So most of the time, such circumstances can push a person into a corner, forcing them to react erratically. Before starting a business with someone, it is best to keep the pointers mentioned above in mind. If you have any queries regarding the dissolution of a partnership or need assistance with anything else related to your partnership, contact our team of legal experts at Vakilsearch. We will ensure that you receive the best possible guidance for your requirements.

Read more:

Subscribe to our newsletter blogs

Back to top button


Remove Adblocker Extension