Going through a divorce is difficult for almost anyone. Just the thought of trying to divide up assets might make you tired. For couples who worked to build a business, that business can often lead to even more problems during the property division process. If you own a business together, you should ensure that you aren't getting the short end of the stick when it comes to the business. Consider these four points.
#1: You have to decide the fate of the business
There are a few different ways that you can handle the business holdings. You and your ex could sell the business and divide the proceeds from that sale. You might opt to simply close the business and walk away. One spouse might buy the other spouse out of their share of the business. You and your ex might opt to work together in the same manner as you are currently even after the divorce. If this is the option you choose, make sure that you and your ex have clearly outlined roles for the business as you move forward.
#2: Ensure valuation is handled appropriately
The valuation of the business is the cornerstone of the property division process for the business. You must make sure that you have the business properly valuated so that you know everything is on the up and up. Valuation is sometimes a complex undertaking, so make sure that you leave enough time to have the process completed.
#3: Beware of underhanded transactions
You should beware of sudden income deficit syndrome when it comes to businesses during a divorce. This is an especially common occurrence if the spouse primarily responsible for the business is the one who filed for divorce. When this occurs, the spouse claims that the business went downhill suddenly and that profits decreased. Oftentimes, forensic accounting can delve deeper into the circumstances surrounding the business so that you can ensure that you are getting the full, accurate story about what is going on.
#4: Double check taxes
There are often tax matters that you must handle because of the business. You must find out what tax implications you have to deal with because of the divorce, the business and the way that these items were handled. It is best to find this out sooner rather than later so that you aren't surprised when it is time to file taxes after your divorce is finalized.
Source: Nov. 30, -0001