Winding up a 2 person firm

[BubbaJ]

My firm has been in business for almost 19 years and I'm planning to retire in 11 months. My business partner is not so lucky and will need to keep working for a few years yet. As we are not the same discipline, there is no sense in them "buying me out". As I have read in several other posts, our clients seek services from us, not the firm name. So, we plan to take down our shingle, split the assets, I retire and they start a new business. A clean break....or is it?

I have let a few clients know my plans, but am hesitant with a few as I think it will negatively impact the work for the rest of the year. These are mostly here and there clients who have projects pop up now and again. I am retiring early, so it may come a shock to some.

We've already talked to our insurance carrier about at tail for our E&O policy.

My question is in regards to larger projects. There is one in particular for a repeat client that construction may extend past my desired retirement date. I don't want to say no as this would project would definitely help pay the bills this year. This also ties in with outstanding invoices. What have others done? Keep the business "operating" until the project is complete and invoices are all paid? Act as a consultant to my business partners new firm to wrap up the large project?

Secondly, what have you all done with paper files? Scanned them in for projects from the last 10 years (statute of limitations in my state)? Kept the paper files in boxes in your basement?

Thoughts and advice welcomed on any other business related retirement topics. Links to resources appreciated.

 

[IRstuff]

I'm more interested in the human side of the transaction. How much good will is there with this customer, i.e., do you feel like you "owe" them the courtesy of informing them? Could you, or would you want to, offer to provide time & material support on this contract past your retirement date?

How pregnant are they vis-a-vis signing the contract?

TTFN (ta ta for now)
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[BubbaJ]

I'm more interested in the human side of the transaction. How much good will is there with this customer, i.e., do you feel like you "owe" them the courtesy of informing them? Could you, or would you want to, offer to provide time & material support on this contract past your retirement date?

They are a good client and they already know I am retiring. It would be unethical, IMO, to propose a contract and not divulge that information. My question was regarding the logistics of business.

 

[IRstuff]

I think, relative to paper files, you should store them reasonably securely, both in terms of physical security and potential of damage from water/fire, etc. While digitizing is desirable, having a pile of digitized files without context is possibly pointless. This would suggest that digitization must be accompanied by someone with sufficient knowledge and context to adequately name files and organize them in some rational file/folder structure.

Certainly, for new business, everything should be digitized during the course of the actual work, but you'd need to have a rational folder structure for people to pigeon-hole everything.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[FSS]

Why not keep the business going but just stop offering services related to your discipline?

 

[Sparweb]

Is your retirement date fixed? Is the termination date for your partnership fixed?
Does the date you stop offering services to one client have to be the same date you stop offering your services to all of your clients?
Does your partner need you to dismantle the joint business before starting another one for some reason?

 

[SteelPE]

How long does your business partner plan to keep going for.... and how much of your end of the business is responsible for your insurance premium?

It seems like you could bring in the large project, and keep your end of the business going until all invoices are paid, then wrap everything up. You could start winding down work on your end in 11 months (presumably the large project will be completed by then) and then fully wrap everything up once the project invoices are fully paid. You could even do the odd small job in-between. If you are looking for a 100% clean break in 11 months then I am not sure taking on this large project is the right thing to do (and it almost seems like you should have half retired a few months ago and wound the company down over the next 11 months).

Whatever you decide, good luck. I'm sure you will figure out the best course of action.

 

[BubbaJ]

Is your retirement date fixed? Is the termination date for your partnership fixed?
Does the date you stop offering services to one client have to be the same date you stop offering your services to all of your clients?

No definitive end date. Our lease is up at the end of this year, but we could either sign another 1 year lease or work remote while things are winding up. We have so much stuff, I need to start cleaning now or plan to take the month of December to do it.

It seems like you could bring in the large project, and keep your end of the business going until all invoices are paid, then wrap everything up. You could start winding down work on your end in 11 months (presumably the large project will be completed by then) and then fully wrap everything up once the project invoices are fully paid. You could even do the odd small job in-between.

Our current E&O policy runs until August of 2024, I would like to have everything wrapped up and invoices paid by then. I'm thinking along the same lines as you suggested, start tapering back in November, then do a few small things while the bigger jobs are wrapping up. Allowing time for travel and family commitments in the spring of 2024. I am 50% responsible for the insurance tail, if that's the way we proceed.

 

[Retrograde]

You can sign a contract as the old firm, and then novate the contract over to the new firm when required. As long as you are up front with your client as to what you want to do (and they are OK with it), you can agree the wording of the deed of novation and have it as part of the original contract. Your lawyer should be able to sort it out.