When you own a business, it is sure to come up in divorce arrangements. As a small business owner, be prepared with an organized business and financials, so you don’t run into any setbacks. Here are some tips to follow as a small business owner going through a divorce.
5 Tips for Your Small Business Before Divorce Negotiations
If divorce is in your near future, look for these tips to ensure your business is in order. When your personal finances are mixed with business financials, it can get murky during a divorce. Follow this list to avoid any problems during your divorce:
1. Do Not Hide Assets in the Business: There are many temptations to hide your assets in the business before a divorce. Most of these will be discovered during the proceedings, and some may not be in your favor. Using the company to cover all of your expenses could result in an inflated income calculation for child support and other post-divorce payments.
2. Distinguish All Business and Personal Transactions: Be sure to mark your business and personal transactions clearly. For example, you can look up the list of approved IRS expenses that can flow under the company’s expenses like cell phone, internet, and fuel. Keep your business expenses coming out of a separate account than personal bills.
3. Get Your Business Appraised: Hire a professional to formally determine the value of your business so you can have an accurate number during the divorce discussions. This way, you will not have anything to contest if you and your partner disagree on how much the business is worth.
4. Keep Detailed Financial Records for Your Business: Make sure your business records are organized. Your business will be under a microscope as part of the divorce – you don’t want to have any holes exposing a lack of business expertise.
5. Re-establish New Roles in the Business for Post-Divorce Life: As many couples co-manage their businesses, you will need to find a way to establish new roles amicably. It may not make sense to continue to work together after a divorce, so this may include buying out one partner or hiring a new employee to step into a management role.
Contact our team at Miles & Hatcher, LLP, for help with your divorce proceedings. If you have questions about your small business and how it will come into play during the division of assets, we can help prepare you for what’s to come. Call to set up your first appointment: (909) 481-4080.