Can My Divorce Impact My Business Finances?
When a business owner considers divorce, one of the most common concerns is how it will affect their business. Texas is a community property state, which means that the business is likely considered a valuable asset that must be divided between both spouses.
However, if the business owner took the necessary steps to protect their business in the event of divorce, they may not need to worry about half of their business being owned by their spouse. Instead, they now need to worry about how their divorce can impact their business finances.
Can the divorce proceedings disrupt daily operations?
Depending on your work hours and how many people you employ, the divorce proceedings can potentially disrupt the daily operations of your business. For example, if you own a small restaurant that is open during lunch hours and you are the main cook, this could create big issues for your business if you have court dates to attend. You may constantly need to attend meetings with your divorce attorney, or go to hearings regarding the divorce. Depending on your business finances, you may need to decide whether it would be beneficial to hire a new cook instead of closing the doors when you need to handle divorce obligations. If you can afford another person to handle the tasks for you, the divorce proceedings may not affect your daily operations significantly.
How to ensure business continuity during the divorce
It can be extremely difficult to ensure business continuity during divorce. However, with proper guidance and detailed planning, you can develop ways to potentially combat issues with your daily operations and ensure business continuity. Here are five tips on how to do this:
- Keep everything as professional as possible: While you may feel like your personal life is falling apart, you must keep your personal and professional lives separated. During your business hours, you should refrain from venting, complaining, or talking about your divorce to your employees or business partners. This is your time to not think about the divorce, and focus on work.
- Concentrate on your business goals: Although it can be difficult, you must concentrate on your business goals. If you ignore your business during a divorce, you may become unmotivated, and it may take a long time for your business to make up the money you lost and start thriving again.
- Communicate: You should always be transparent, and communicate with your employees and business partners. They may have heard that you are going through a divorce, which has them worried about their future. However, if you are honest and transparent, they will see you as a trustworthy person and anticipate any potential changes that could impact them.
- Gather and store your records in a safe place: When going through a divorce, you must gather and store your records in a safe place. These records should show what type of business you run, the daily operations or schedule you have in place, and the details of your business finances. It is important to have this information where you can easily access it, because you will likely need to provide it to your San Antonio divorce attorney when a dispute or question arises.
- Plan for your business future: During a divorce, it is essential to take time to plan for your business’s future. For example, if your spouse was previously involved in your business, you will now need to develop a plan for how your business will continue running without them. You must also think about long-term goals, such as how you plan to bring in a stable income or grow to have more employees.
You can also reach out to a San Antonio divorce lawyer for advice on how to protect your business during this time, as well as how to create a well-organized plan for your business’s future operations.
How will ongoing financial obligations to a spouse impact business cash flow?
Another issue that may affect your business cash flow is the financial obligation to pay spousal maintenance or child support after divorce. Some of the money that is moving into your business will now need to go toward spousal maintenance or child support payments. Therefore, your business must bring in more cash to make up for the payments going to your ex-spouse or children.
Business owners faced with child support or spousal maintenance obligations should create a financial plan to ensure they can continue to run their business while making these payments. A few steps you may need to take include:
- Create a budget for your business that accounts for these financial obligations
- Manage your cash flow in a better way
- Decide whether you need to work another part-time job, or take out a loan to hire more employees or finance your business
Could business income affect spousal support calculations?
Yes, your business income can affect spousal support calculations. Therefore, you must keep financial records that show how much income you make from your business, which will be used to calculate how much spousal support you may be required to pay. While this may seem simple, it is actually a very difficult process for business owners, because their income can fluctuate. This happens when a business brings in a high revenue during some months and a low revenue in others, or the business experiences issues that require the business owner to make necessary repairs or spend more during a certain timeframe.
As a business owner, it is crucial you work with an attorney who knows how to evaluate a business owner’s profit and losses, and is aware of the fluctuations that typically occur, to ensure that you are provided a fair income after spousal support, child support, and other financial obligations.
Deciding to end a marriage can be very challenging, especially if you are a business owner. You may be devastated about losing your marriage, while also worrying that you may lose the business you have spent years growing. At Grable Grimshaw, PLLC, our San Antonio divorce lawyers know and understand the obstacles that business owners face during divorce, and we are glad to help you navigate and that emerge throughout this process. We cannot only assist you with protecting your business during the divorce proceeding, but we can also help you develop a well-thought-out plan to build the future business you desire. Call our office in San Antonio or complete our contact form to schedule a consultation today.