You may not have imagined when you set up your business that one day you would head to divorce court, yet there are many business owners who grapple with the end of their marriage while running a business. If you are dealing with divorce, you want to do what you can to make sure your business does not suffer in the process.
If your spouse has contributed labor or money to your business, it is very likely your operation will become part of the divorce process. Forbes explains what could happen during your divorce to negatively impact your business and what you may do to prepare for it.
Distracting you from your business
A divorce can do a lot to pull you away from running your business. The court dates alone can occupy time you would spend at work. Even if you are at your workplace, you may have to deal with phone calls or emails relating to your divorce. You will also have to produce documents relating to your business. Complying with requests for business documents can take a lot of time and effort that you would otherwise spend on your business duties.
Distracting your employees
Your divorce may also distract your employees. If you need important financial documents, you will probably ask your workers to help collect them for you. Your employees may also have to conduct inventory reviews, deal with visits from a business appraiser, or analyze your tax returns. Your workers might also need to take part in interviews about your business operations.
Dealing with divorce distractions in advance
By addressing some issues through a prenup or postnup, you might minimize the impact of a possible divorce on your business. If you set up your business before your marriage, you could clarify that the business is separate property and will not be subject to division in a divorce. You might also set up a method to valuate your business, dictate whether your spouse shares in the increase or decrease of your business value, and set up a way to buy out your spouse if your spouse owns part of your business.
You may also guard your business from the impact of divorce by managing your company in certain ways. Consider refraining from mixing your business expenses with your personal costs. Document your business capital and label it as premarital or marital money. Pay yourself a fair market salary and do the same for your spouse if your spouse works for you. This may prevent a judge from thinking that you did not pay your spouse fairly and award your spouse a bigger contribution from your business.