7 Steps to Take to Save Your Business During a Divorce
Going through a divorce is a stressful and emotional process on its own. If you are also a business owner, you have even more stress from worrying about what could happen to your business. Luckily, there are steps you can take to save your business during a divorce that will also help relieve some of that stress you may be feeling.
1. Hire a Lawyer
You may already have a business lawyer, but you also need to find a divorce lawyer. Find someone who is experienced and can help you through the process. Make sure it is someone you trust with a good track record. It should also be someone who will listen to your unique problems and issues because everyone’s situation is different.
2. Gather Records
Organize your tax records, bank statements, financial documents, contracts, or any other information that isn’t already easily filed, but accessible.
Be prepared to hire (and use) an accountant if you do not already have one. You may have to scrutinize your books closely during this process. It goes without saying that keeping these records in order in the first place is the best practice.
Of course, it helps if you can act amicably toward your spouse as you work through the details. In most states it is mandatory to go through a mediator at least once. It is the best for both sides if everything ends here. You will save — literally — a lifetime of effort, money, sadness and everything else if you can end the divorce here. That said — it usually doesn’t happen.
3 Divide Assets
Dividing assets in a divorce isn’t always going to be fifty-fifty, as the myth goes, nor should it be. For sure, your business is an asset. Its value needs to be determined during the divorce, but that doesn’t automatically mean your spouse should get half.
Was the business started before the marriage? That may play into how assets, including the business, are divided. Did your spouse work in the business, or are you the sole owner? These are just a few of the issues that need to be addressed when determining how or if a business should be divided during a divorce.
4 Separate Finances
If your household finances aren’t separate from your business, they should be – for a lot of good reasons. Record keeping is much harder when business and household accounts are run together. This is business savvy 101. Keep business and personal finances separate right from the beginning.
5 Fire Your Spouse
This may sound cold, but it may be necessary if your spouse was working in the business. Phasing your spouse out of the business as soon as possible may help you to keep more of the assets and profit of the business.
6 Keep Records
Document and keep records of all conversations about the business. Whenever possible, follow up in writing through emails or other written forms of communication in order to protect yourself. Always keep paper trails because you may need them in the future for proof, if anything is disputed.
7 Protect Yourself
You may end up needing to open new bank accounts in your name only if your spouse was on the account. Check your credit report to make sure everything is accurate. Look at any contracts your business has, to make sure no changes need to be made if your spouse was involved and signed the contracts with you.
It may be best to do this part with a business lawyer. Yes, you want to do everything with one lawyer — but these days, that is not possible, especially if you have a business. If you are unsure of anything, check — and then check again. Don’t allow yourself an episode of depression over this. Divorce is a business. Treat it as such.
Businesses don’t always fail or dissolve in the case of divorce, so it is possible to save yours. You may feel like you are fighting to go forward like you did as a new entrepreneur. That’s okay too — you know how to do this — you know how to build a business, go out and build yours up again.
Follow these steps to help ensure your business stays intact after a divorce.