Keeping a small business running is more than a full-time job. For many entrepreneurs, their companies are an integral part of their lives. Whether you’re getting a startup off the ground or maintaining a family business, you’re putting in time, effort, and money every day to keep things going.
It should be no surprise then that a divorce could impact your startup. If you’re considering ending your marriage, you should prepare for how the process could affect your company.
Small Businesses as Assets in Divorce
Your business is an asset. In fact, if you’re like many entrepreneurs, it may be one of your most valuable assets. Whether you operate as an LLC or incorporate the business and hold shares, you directly or indirectly own the value of your company. Your ownership is what gives you the right to control operations.
That’s why divorces have such a great impact on small companies. If your business is considered your direct property, it can be split during asset division. If you’ve incorporated but hold a controlling interest in the company, that interest can be divided. Either way, your right to run your business could be affected by your divorce.
That can cause problems, both immediately and over the long run. In the short term, your spouse could choose to sell off firm property or make professional decisions you disagree with, putting the startup at risk. Over longer periods, splitting ownership with your spouse could impact your ability to react quickly to changing financial circumstances, reduce investor trust, and prevent your startup from reaching its full potential.
Protecting Your Company During Divorce
A primary divorce goal for many entrepreneurs is protecting their companies. While the intersection of business and family law is complex, there are several tactics your attorney may suggest to minimize the impact of your split on the company:
- Define the organization as separate property with a martial agreement. The best way to protect businesses is to ensure they’re treated as separate property. Prenuptial and postnuptial agreements are simple ways to keep your company under your control.
- Offer other assets in exchange for full control over the company. If your divorce is already in motion, you can negotiate with your spouse to keep the organization. Your spouse may prefer to keep tangible and liquid assets like real estate or retirement accounts and may accept those items in return for granting you full ownership of the business.
- Place your company in a trust. In some cases, you may be able to place your entire business in a trust to protect it from division of ownership.
Learn How to Protect Your Startup With Expert Legal Counsel
Maintaining full ownership of a startup after a divorce is often complicated. Don’t risk making a mistake that could haunt the company for years to come. Instead, talk to the experienced San Mateo divorce attorneys at the Viola Law Firm P.C. Our dedicated attorneys specialize in assisting clients with the complex issues involved in high-asset divorces. Learn more about how we can help you by getting in touch today.