Divorce can be a challenging and complex process, especially when it involves a business that you worked hard to establish.
As a sole business owner, it is important to take proactive steps to safeguard your business interests during this difficult time.
1. Have clear ownership documentation
Ensure that your business ownership documentation is crystal clear. Maintain organized records of business-related documents, such as registration certificates, licenses and ownership agreements. Clearly outlining your sole ownership in these documents can serve as a strong foundation when addressing business assets during divorce proceedings.
2. Maintain separate finances
Keep your business finances separate from personal finances. Open and maintain a dedicated business account to track all business-related transactions. This clear separation helps establish a distinct financial identity for your business. This makes it easier to demonstrate the independence of your business assets in the event of a divorce.
3. Document business contributions
Regularly document your contributions to the business. Whether it is your time, expertise or financial investments, maintaining a record of your efforts can help establish the value you bring to the business. This documentation can be invaluable when determining the division of assets during divorce proceedings.
4. Obtain a business valuation
Regularly obtain professional business valuations to determine the current worth of your business. Keeping up-to-date valuations can provide a realistic and accurate representation of your business’s value, aiding in the equitable division of assets during divorce proceedings. Having a professional valuation can also demonstrate transparency and a commitment to fairness in the process.
While one may not plan on getting a divorce, life changes. In 2021, 989,518 divorces occurred in the nation. For sole business owners, navigating a divorce requires careful consideration and strategic planning.