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business owners
Divorce for Business Owners
If one or your spouse are business owners, or are partners in the same business, your divorce will be more complex and require particular steps to a resolution that works.
First, let’s address what happens if you and your spouse are partners in a business.
Are you IN Business with your Spouse?
The divorce betwee the owners of a business can be a difficult process for everyone involved.
The divorce of the business owners may result in one partner buying out or selling their interest to the other partner, or even in the dissolution of the business entirely.
In any case, it is important that all parties involved are aware of what is expected throughout each step of the divorce process to ensure that it is handled in a fair and equitable manner.
The first step when addressing this is a Business Valuation. One will have to be completed to determine how much each partner’s share of the business is worth. Typical valuations include gathering the basic information about the business itself, including?
- all assets
- liabilities
- income statements
- balance sheets
This can then be used as a basis for negotiation or arbitration between both parties in the divorce agreement.
If a divorce settlement is not reached, the court may order the sale of the business and distribute the proceeds between both parties.
Divorce Settlements for Business Owners | Employee Impact
It is also important to consider how the divorce will impact not just you, but employees, customers and vendors as well.
In our experience, pro-active communication with these groups should be clear and handled in a professional manner, but with all details kept confidential. Oftentimes vendor and customer relationships are vital to the ongoing success of the business, so keeping in touch is key.
Depending on the outcome of negotiations, it may be necessary to make changes such as replacing the business name, restructuring the management team, or altering services and product offerings.
The divorce of a business owner can have serious consequences for all involved. It is important that both parties understand their rights and obligations under the law, as well as what is expected from them throughout the process.
And this is also why it’s vital to have a divorce attorney that has experience in this complex addition to what is already a difficult situation – the divorce itself.
Next, we’ll address if you or your spouse own a business separately, big or small, and what that impact might have on the divorce.
Your Spouse and Your Business
Whether you own a business, or your spouse owns a business this is a complex issue. Every business is different. Business ownership creates more questions than can possibly be answered here, but those questions include:
- What is the value of the business?
- How much income is generated by the business?
- Are there other partners in the business?
- Is it a cash business?
- Can the business be sold?
- What are the tax implications in the determination of the division of a business?
- When was the business created?
We often see the most difficulties come in when your spouse has a cash business or some kind of “side-hustle” or part time work.
Since 2020 in particular, many people have multiple sources of income. And not all of that is reported or recorded properly, which is a particular issue in the division of property and determination of child support and custody.
That’s why the discovery phase is so important. And why your work in documenting various potential income sources and spend is so vital to a fair and equitable settlement.
In fact, that kind of “hiding money” accusation is a common theme in the Wayne County divorces we handle:
The BUSINESS Side of Divorce
Being a business owner can make everything even more difficult when separating from your spouse. Reach out to the lawyers that understand both business AND divorce – we’re on your side!
There are many more questions to be asked and answered and The Smart Law Group will be there with you to ask the smart questions and get the answers so you can make a smart decision on what to do with that business.