Imagine your business is being jeopardized by a divorce. Scary thought, right? Fortunately, there are some steps you can take to divorce-proof your business. First, having a solid business plan in place can help to demonstrate to the court that the business is a separate entity from any personal assets and should be treated as such in the event of a divorce. A comprehensive business plan should include details about the ownership and management of the business, as well as financial projections and goals.
Here are other steps you can take to divorce-proof your business.
Proper documentation entails keeping accurate records of all financial transactions and maintaining clear lines of communication and decision-making within the business. This can help prevent confusion or misunderstandings about business ownership in case of a divorce.
Prenuptial or postnuptial agreements
A well-drafted and legally binding prenuptial or postnuptial agreement can help to outline the terms of ownership and division of assets in the event of a divorce. It can also help prevent any disputes or misunderstandings arising during a divorce.
Keeping personal and business finances separate
This step involves having separate bank accounts, credit cards and other financial instruments for business and personal use. Making a distinction between your business and personal accounts will make it easier to determine the value of your business and how much you’ve contributed towards it.
Pay yourself a good salary at the market rate
If you sacrifice your salary to grow your business, your ex may argue that they’re entitled to a share of the business. Therefore, make sure you’re paying yourself a market-rate salary.
A divorce-proof business is one that is well-structured, well-documented and has legal protection in place. Taking these steps can help protect your business and ensure that it is not easily divided or liquidated during a divorce.