What happens to your business during a divorce?

On Behalf of | Mar 13, 2023 | Divorce |

Owning a business with your spouse may seem like a good idea at the time, but once you go through a divorce, you might start to regret it. After all, you have to decide whether you can work together and remain co-owners or if one or both of you should part ways with the company.

What happens to your business depends on your and your former spouse’s decisions.

Continuing to run a business

If you choose to run your business, you do not have to split any of the business’s finances or assets. However, you have to clarify which responsibilities belong to each partner. If you paid yourselves together, you now have to split the income. Becoming business partners can be difficult if you have a contentious relationship. After all, you still have to work together closely.

Separating as business partners

Most divorced couples choose to separate as business partners because working together causes too much conflict. Some divorces end in dissolving the company entirely and splitting the assets, whereas others involve one spouse leaving the company. Your specific rights depend on your business entity. For example, if you have an LLC or partnership, you may be able to buy out your spouse. In this case, you would pay him or her the share of ownership. You take full control of the company and your spouse leaves with compensation.

If you choose to dissolve the business, you and your spouse will sell it together and divide any proceeds you receive.