Divorce can be challenging for anybody, but business owners face a range of concerns that can be especially complex.
These are some of the common concerns business owners may encounter during the divorce process.
The method of business valuation
Determining the value of the business is essential for equitable distribution of assets. Valuation methods, such as market valuation, asset valuation or income valuation, must be employed to assess the worth of the business accurately. Just agreeing with your spouse on the process to be used can be the source of conflicts.
Division of the business assets and debts
Deciding what to do with the business itself is a significant concern. Business owners may need to consider options such as buying out their spouse’s share, co-ownership arrangements or selling the business entirely and dividing the proceeds. Any debts associated with the business must be addressed. Exactly how that can be addressed may depend on prior agreements (such as prenuptial or postnuptial agreements) with your spouse and what ultimately happens with the business itself.
The way that spousal or child support is calculated
Business owners’ income can be more complex to assess, especially when there are fluctuations in the company’s profits. Determining fair spousal support or child support payments requires careful evaluation of your business’s financial situation, including its stability and how you are paid.
The tax implications of any asset liquidation
Divorce can have significant tax implications for both the business and you, as its owner. Depending on what you do with the business itself and how you approach the division of assets, you may need guidance from an accountant or business advisor about capital gains taxes and other financial issues.
The public disclosures of private business
Divorce proceedings can sometimes lead to public disclosure of personal and business information. You may have concerns about safeguarding sensitive business details, trade secrets or proprietary information during the divorce process that need to be addressed.
Divorce is a highly emotional process, and stress can affect your ability to focus on your business effectively. You may have an easier time with the entire divorce process if you seek legal guidance before you begin.