Small business owners usually rely heavily on their family members to support them as they build the company. For a person who’s married, this means that their spouse is going to have to provide them with considerable help throughout the process. This often leads to the company being a source of marital pride. But what happens if the owners divorce?
Going through a major personal upheaval like divorce can have a direct impact on the company. You have to determine what’s going to happen with the business. There are several options for this.
- Keep the company structure as is: You and your ex can work out a deal to split the company. Make sure everything is clearly spelled out in writing. Include what each person is responsible for, as well as how profits and expenses are handled.
- Sell the company to another party: This results in having to determine the profit split from the sale. A business valuation is necessary if this is going to occur.
- One person buys the other person out: This dissolves the interest that one person has in the company. The person who still owns the company is fully liable for the debts and can make all decisions for the company.
- Close the company: This is often a last resort that’s reserved for situations in which a buyer can’t be found, but the other options aren’t feasible.
One thing that can play a role in what happens is the presence of a prenuptial agreement. If one is present, it will be followed.
Regardless of how the business is handled, it must be factored into the property division agreement. This helps ensure that both sides receive the settlement they’re due. Your attorney can work on your behalf to protect your interests throughout the process.