What to Consider if You Are a Small Business Owner Going Through a Divorce

When you got married, you joined your life with your spouse’s in a formal, legal way. If you were a small business owner, chances are you linked your business to your spouse, too, and the same is true if they owned a business.

When a divorce involves a small business, things can naturally get tricky and even emotional. After all, you and your spouse likely put a lot of time and effort into the business, and neither one of you wants to lose that investment. On top of all that, you may depend on the income the business generates to meet some or all of your family’s needs.

If you own all or part of a small business with your spouse and you are thinking about getting a divorce, it’s important to contact a family law attorney for help as this can become a very complex matter. You should also think about how you are going to move forward, and what may happen next.

Factors to Consider

You will need to explain your business to your attorney and give them some idea of what your expectations over the business are in the divorce. Think about the following questions and answer them in relation to your business so you have a starting point to discuss with your attorney.

•       Which industry is your business in?
•       What is the legal structure of your business right now?
•       What role do you play in the business?
•       What role does your spouse have in the business?
•       When did you get the assets of your business? Was it before the business opened or after?
•       Do you have any children you may want to pass this business along to one day?

You may know the answers to some of these questions off the top of your head, but it still helps to write everything down so you don’t overlook any important details. For the legal structure, gather all the paperwork you have related to the formation and organization of the business.

Weigh the Options

Once you’ve taken a closer look at the business and just how it fits into your life, you can then think about where you may want to go next. Can you, for example, see yourself running the business without any help from your spouse? Do you think it’s possible you would be able to work with your spouse after the divorce as co-owners? With everything weighed and considered, what do you think matters most to you?

Generally speaking, when business owners are getting divorced, they have three options, as outlined below.

-One spouse becomes the sole owner by buying out the other spouse’s business share.
-Both spouses agree to sell the business.
-Both spouses agree to run the business together after the divorce as co-owners.

You’ll need to think long and hard about which option is the most realistic, no matter how strongly you may feel about keeping or selling the business. If, for example, you are struggling to talk with your spouse now, it may be very difficult to run the business with them after divorce even if that is what you’d prefer to do. There are also other considerations at play, such as the financial side of things. If your business is just now breaking even and you haven’t yet made your investment back, you may want to consider working with your spouse as co-owners for now so it’s not a loss.

A divorce is a major life change, and when you have a business with your spouse, it can seriously impact your work and finances, too. Before you decide what to do with your small business, consider all of the angles.