Dissolving partnerships and companies
Closing a business that is structured as a partnership or company may have different or additional requirements to closing a business that is only owned by you.
Dissolving a business partnership
There are a number of ways a business partnership can be dissolved. These include:
- the partnership term as stated in the formal partnership agreement has expired
- one partner gives written notice to the other partner to exit the partnership
- one or both partners can no longer legally own a business
- there is a court order
- there is a death of one of the partners
- the business has gone bankrupt or insolvent.
Legislation for dissolving a partnership
The terms and conditions of dissolving a partnership will depend on whether there is a formal partnership agreement in place. If there is no partnership agreement in place, then the terms and conditions will be guided by the state legislation for partnerships:
- Partnership Act 1963 (ACT)
- Partnership Act 1892 (NSW)
- Partnership Act 1997 (NT)
- Partnership Act 1891 (QLD)
- Partnership Act 1891 (SA)
- Partnership Act 1891 (TAS)
- Partnership Act 1958 (VIC)
- Partnership Act 1895 (WA) .
There may also be different legal requirements when dissolving a partnership for your individual state. Contact your state's government business authority for more information:
- Fair Trading (NSW)
- Business Development (ACT)
- Department of Business (NT)
- Business and industry portal (QLD)
- Business, industry and trade (SA)
- Business Tasmania (TAS)
- Business Victoria (VIC)
- Small Business Development Corporation (WA)
Closing a company
A company officially closes when it is deregistered with the Australian Securities and Investments Commission (ASIC). In order to deregister a company, all of the following conditions must be met:
- all members of the company agree to deregister
- the company has stopped trading
- the company's assets are worth less than $1000
- the company has no more outstanding liabilities, including employee entitlements
- the company is not involved in any legal proceedings
- the company has no outstanding fees and penalties under the Corporations Act 2001.
Until the company is deregistered, it must continue to meet all the legal requirements of a company, including paying the annual review fee, even if it has stopped trading.
If the company does not meet the conditions for deregistration, the directors of the company can choose to wind up the company voluntarily, in order to allow the company to meet the criteria.
Visit the ASIC website for more information on closing down your company.
The process and requirements of closing a company can be complicated, and will vary depending on the type of company you are closing down and the financial situation of the company. If you are looking to close down your company, you should consult your legal adviser and accountant.
What to do...
- Read our Closing your business page for more detailed information on how to close your business.
- Head to our Bankruptcy page to learn more about what to do if your partnership or company needs to close due to insolvency.
- Tell the Australian Taxation Office if you are changing, selling or closing your business.