Concord business owners stand to lose a lot when faced with divorce. You may even lose ownership stake in your business, which can have a devastating effect on you as well as the future of your business. Accordingly, knowing how to properly safeguard marriage is a must, as illustrated by Inc.
The level of involvement your spouse has in your business can be an influencing factor in court. That’s why you should take steps to limit his or her involvement now, particularly as it pertains to financial matters. Separate finances for personal and business costs is crucial to establish that you were the primary contributor to the success of your enterprise and that you didn’t use shared funds to achieve your goals. Also, don’t consult your spouse on management matters, even casually, as this could be construed as providing advice.
Despite your efforts, the judge may decree that your ex does indeed have a stake in your business. If so, the subsequent valuation will establish just how much it’s actually worth. It’s good to stick with the book value in this case, as this number tends to be a lot lower than the market value, which is how much the business could potentially earn if it were sold. Your attorney can help you create a valuation strategy that best suits your needs.
Of course, a premarital agreement protects your business before you even get married. You can add a statement that your soon-to-be spouse forgoes all claims in your business should you divorce at some point. You can also clearly spell out property ownership for both parties, which prevents a person from claiming a business was shared. While you may feel uncomfortable having this discussion, it’s important to ensure both parties are on the same page.