Nobody enjoys thinking about the possibility of divorce, especially at the beginning of a marriage. But it’s still an important topic to contemplate – particularly if you’re a small business owner.
You’ve poured your heart and soul into your company and would never want to put its future at risk. Ideally, you’ve signed a prenuptial agreement with your spouse that outlines how the business would be handled if you separated.
But if you didn’t, don’t fret. There are still steps you can take to protect your small business in the case of a divorce:
- Sign a postnuptial agreement. A postnuptial agreement is similar to a prenuptial agreement but completed after your marriage. It can hold the same valuable information as a prenup, such as how you and your partner will split assets and property.
- Clarify that you’re the sole owner. Establishing yourself as the only owner of the business can help in the case of divorce. Make it clear in your business’s organizing documents that the company’s ownership cannot be transferred if you get divorced.
- Separate your personal and business expenses. This is a critical step in ensuring the value of your business is accurate. If the value is not right, it could negatively affect your settlement. You should also thoroughly document any cash business expenses to ensure the company’s value is correct.
- Pay your spouse market rate. If your spouse is also your employee, you should pay them the market rate for their position. Otherwise, they may seek a higher percentage of your company’s value if you split.
A divorce can impact the future of a lot of your assets. Don’t let your business be one of them. Follow these steps to help protect your company from divorce – just in case.