Dissolve a Partnership Firm

Dissolve a Partnership Firm

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Dissolution of a Partnership firm

Partnership firm is the business entity that is formed with a sole purpose of profit from business. Two or more parties come together with a formal agreement (known as Partnership Deed) to own and manage the business. Once the purpose is met or after the partners decide to put in end to the partnership it needs to be dissolved and the partnership comes to an end. On dissolution of the firm, the business of the firm ceases to exist since its affairs are would up by selling the assets and by paying the liabilities and discharging the claims of the partners. The dissolution of partnership among all partners of a firm is called dissolution of partnership firm. This is usually done through a dissolution agreement between the partners.

Methods of dissolution of a partnership firm in India

Documents Required for winding up of partnership firm

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Process for dissolution of Partnership Firm

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Frequently Asked Questions


When the partnership ceases to exist, that date is known as the dissolution date . after this there is no business relationship between the partners. After which the partners will complete any unfinished work, settle any liabilities, realize any partnership assets and otherwise wind up the partnership. The winding update is the date when the winding-up of the partnership is completed.


The dissolution deed would cover :

1)The date on which the partnership will cease trading and be dissolved and how it will be wound up.
2)what the partners can and cannot do from the date of dissolution until the partnership is wound up.
3)the return of documents, the realization of the partnership’s assets and the termination of contracts and other arrangements for the discharge of the partnership’s liabilities.
4)the preparation and approval of the partnership’s final set of accounts.
5)the distribution of any partnership monies after the liabilities have been discharged.
6)the retention of records
7)the notification of the dissolution


First, the Losses of the firm will be paid out. The Assets of the firm and the capital contributed by the partners to set-off losses of the firm will be applied :
Third party debts will be paid first. Next, loan amount taken by a firm from any partner will be repaid to that partner
Capital contributed by each partner will be repaid to him in the capital contribution ratio. Balance amount will be shared among the partners in their profit sharing ratios. Upon realization, all assets will be sold off in the market, and the cash realizing out of such a sale will be used for paying the liabilities. Assets or liabilities may also be taken over by the partner(s) for which the respective partner capital accounts will be adjusted by such amount.


1) If the partnership was created for a fixed term, then on the expiration of the term the partnership will be dissolved.
2) If the partnership has been created for a particular task or objective, then after the completion of that task or fulfillment of that objective the partnership would come to an end.
3)If one of the partners dies than it’s prima facie that the partnership would come to an end unless it is provided otherwise in the agreement either express or implied from the conduct of the partners.


The partners are liable to the third parties for any act done before the dissolution. The liability of a partner finishes when all the event are finished that has been taken up before the dissolution of the firm until public notice is given of the dissolution.


Every partner is entitled to equal rights or according to the contract. All the partners are entitled to the property of the firm applied in payment of the debts and liabilities of the firm and to have the surplus distributed among the partners or their representatives according to their rights. These rights are given when winding up of the firm is taking place


Dissolution of a partnership occurs when a partner ceases to be associated with the business, whereas dissolution of a firm is the winding up the business.

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