Divorces have many consequences, but they ideally should not disrupt the operations of what is otherwise a successful business. Hundreds of thousands of dollars can be at stake in a business, especially when factoring in employee salaries, vendor contracts, company equity, contributions to the local economy, and more.
To prevent disruptions, business owners might need to plan ahead for their divorce — as hard as that may be during a seemingly perfect marriage. You can start protecting your business from divorce by taking the following actions and by consulting with a Nevada business lawyer.
Keep Your Business and Family Life Indisputably Separate
This holds true no matter if you are married or not, but it becomes even more critical if you think you might have to split property with a spouse in the near future.
Put simply: there should be a hard line between your business and your personal finances. This distinction should be clear, which means that you avoid activities like co-mingling company resources and personal accounts. Instead, the company should have its own set of accounts and its own legal distinctions separate from you as an owner or your household at large.
Pay Yourself a Fair Salary
Another issue might arise when you try to “starve” your personal cash flow by paying minimal salary disbursements to yourself, while keeping most revenues hoarded within the company. While all of your income is subject to taxes, keeping money in the company that you intend to access for personal use later can be a recipe for disaster.
This particular situation is worsened by divorce. Your spouse could allege that money that should have been family income went to company assets instead. This could potentially motivate a judge to share those assets with the spouse.
Compromise by Giving Up Other Assets
If you truly value your business, you will be willing to sacrifice other things to hang onto it. Chances are good that your spouse contributed at least some value to the business either directly or indirectly. You should make sure you assess that value fairly, and consider offering some sort of property or assets in-kind.
Another option includes offering to buy out the ex-spouse’s share through regular ongoing payments, or selling a minority stake of what you own to employees or an investor.
Make Sure Your Business Is Valued Fairly
Some spouses may try to overvalue your business in order to squeeze as much out of you as possible. Use a court-appointed, neutral valuation expert to eliminate this possibility. It is important to have this information on-hand in order to fairly and adequately distribute assets in a company.
Hire a Nevada Business Lawyer When Protecting Your Business From Divorce
While a divorce attorney can help you with paperwork and property division in normal cases, you may need to supplement or replace their expertise with an experienced Nevada business lawyer; especially if your company is on the line. You can contact Connor & Connor today for a free case evaluation and to gain a better understanding of your options moving forward.