Running a business while going through a divorce can be a stressful experience. You might be nervous to make any big business decisions that would affect your finances or assets, like selling the business or expanding, while going through a divorce.
What do you need to know before you sell your business?
The business will be considered a major financial asset in any divorce. Most courts will count the business as marital property, even if only one person owns it.
You can absolutely sell your business or expand it during the divorce proceedings. These things can happen simultaneously.
However, since the business might be counted as marital property, you will still have to compensate your spouse after the sale is finalized or otherwise pay your spouse their share. If you own your business with your spouse on paper, then you cannot sell it without their explicit consent.
Either way, profits from the sale of the business will have to be split between you and your spouse as the divorce is going on. Otherwise, it can negatively impact you.
How much would you have to pay your spouse?
Normally, the profits from selling marital property like a business are divided fairly between both spouses. Certain things are taken into account when determining what a fair division looks like, including:
- Individual income
- Length of the marriage
- Value of the business
Some states split the profits of the business between both spouses equally, meaning each spouse gets half of the profits. Of course, if you’re the sole owner of your business and your spouse didn’t help with it, then you might not think this is fair. That’s why the court looks into other external factors, such as the amount of money you both have put into the business. Multiple factors can have a part in the court’s decision when it comes to splitting ownership of a business before it’s sold.
It can be hard to decide whether or not to sell your business during a divorce. It’s important to consult a finance professional and an attorney before making any decisions.