No one ever plans on getting divorced, but it always happens. In fact, according to the 2016 American Community Survey, nearly two million marriages ended in divorce that year. That’s a decent chunk of all marriages in the United States.
The cost of divorce is relatively huge. The average price is around $12,000. That’s about 18% of the annual salary of a household. However, the cost isn’t the only problem. Divorce can also cost any business you might have run together a lot of money. It can also cost its dissolution.
Married couples think their relationship will last as long as their business. But that always isn’t the case. Studies have shown that around 30 to 40% of all small businesses are adversely affected by divorce. The most common reason is that the couple can no longer work together. And if they can’t work together, then the business usually suffers. So if a divorce is upcoming in your life and you’re worried about your company, you need to know how it can impact your business.
Who Keeps The Business?
The main question that might be running through your head is, “who gets to keep the business?” The answer is that it depends. Both of you will decide most cases through mediation or negotiation between the two parties. However, if you can’t come to an agreement, then it might have to go to court.
The court will decide a few things. Firstly, they’ll decide whether the business is considered marital property. This usually happens if the business is started during the marriage. If it was, then the court will divide it equally between the two of you.
However, if the business was started before the marriage, then it’s more likely that the court will view it as separate property. This means that whoever owns the business will get to keep it. Of course, the court might still award the other spouse a share of the company if they contributed to its growth or success, but this isn’t always the case.
If you’re worried about losing your business in a divorce, you should try to agree with your spouse outside of court. This way, you can keep control over what happens to your company. Having a reasonable divorce attorney can help with dealing with this. An attorney can lay out different options for both of you before you go to court. Doing this gives you a better chance of keeping your business or having an equal part with your ex-spouse.
Dividing up the business isn’t the only trouble with divorce. It can also impact the business itself if it doesn’t lead to dissolution.
Other Impacts on Your Business
The cost of divorce is high, but it doesn’t stop there. Divorce can also harm your business. If you and your spouse can no longer work together, then it’s likely that your business will suffer. After all, you’ll be splitting your time and energy between two businesses instead of one. You might also have to deal with the legal costs of divorce, which can take away from your business’s budget.
It’s not just the emotional and financial cost of divorce that can hurt your business. It can also damage your company’s reputation. Clients and customers might not want to work with a company that’s undergoing many changes. It’s especially true if they’ve heard bad things about you or your ex-spouse. If you’re worried about this, you should keep the divorce as private as possible.
You should also think about how divorce will affect your employees. They might be loyal to you, but they could also worry about job security. After all, a lot can change after a divorce, and they might not be sure if their position is safe. If you can, try to reassure them that the business will go on as usual. This way, they’ll be more likely to stick around and continue being productive employees.
It might be wiser to dissolve the business when all else fails. It’s often the best solution if you and your spouse can’t work together. It’s also better for the company, as it will avoid further damage.
Of course, this isn’t always possible, especially if you’re not the business’s sole owner. In this case, you might have to sell your company share to your ex-spouse. Or, you could buy them out so that you’re the only owner. Either way, getting help from a lawyer or accountant is essential to ensure the dissolution is done correctly.
Ending a business partnership can be difficult, but it’s sometimes necessary. Keep these things in mind if you’re going through a divorce and you’re worried about your company. With the right help, you can protect your business and ensure it comes out of the divorce unscathed.