Tapp Law Firm
Free Consultation: 501-623-9800
501-623-9800
Menu Contact

Keeping the family business during a divorce

Everyone goes into marriage with the best intentions, similar to the plans they have when starting a business. No one wants a marriage to fail, but it happens far too often. It means entrepreneurs need to consider how their marriage may influence business. Luckily, there are during a nasty divorce.

Maintain proper business practices, including incorporating

With any small business, it is important to incorporate. When you incorporate, you establish the starting date of the business. You need to follow appropriate business practices, which includes paying yourself a reasonable wage and having annual meetings to elect officers. Some owners try to wait to compensate themselves until the business is thriving. However, his can hurts your business during a divorce proceeding.

If you do not incorporate, you could be required to pay alimony and child support based upon your gross business income rather than the businesses income after expenses. When courts calculate income based on the Arkansas Supreme Court formula, they do not consider expenses. The best way to avoid this argument is to bring home a regular paycheck, like any other employee.

Keep family and business separate

Arkansas is a marital property state. If the business is formed during the marriage, it will be considered marital property unless that property division is not equitable. However, business started prior to marriage belongs to the person starting the business unless changed during the marriage. Most small business owners feel temptations to include relatives or spouses in their growing company.

However, when you intertwine business and family, your business may ultimately become a marital asset. In Arkansas, through equitable distribution. Essentially, the court decides a fair way to separate all shared property between two spouses.

If your business is marital property, your spouse is entitled to a fair portion of that company. If they worked with you helping build the company, the court will most likely award them some share of the company. To avoid this, keep your family out of your business.

Learn to compromise

You may do everything right, and the courts may still want to award part of your business to your spouse. In this case, you want to create a compromise between you and your spouse. You could offer another asset in exchange for sole ownership in your company, or you could make small payments over time to payout your spouse in your business.

If you are dead set on not sharing your business, you need the right representation to ensure your company isn’t eligible for property division. Consider all your options before bringing your business into court.

No Comments

Leave a comment
Comment Information

Whether you need guidance through divorce, a personal injury lawsuit or any other of our practice areas, we encourage you to contact our office as soon as possible: 501-623-9800

msg iconEmail Us For a Response

Let Us Know Your Legal Need

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Tapp law Firm
Tapp law Firm

Tapp Law Firm | 424 Ouachita Avenue | Hot Springs, AR 71901 | Hot Springs Law Office Map

Tapp law Firm