A small business owner’s guide to divorce

By Emma Williams

It’s not like people are planning or want to get a divorce, but in many cases, things just don’t work out between spouses. Divorce falls hard on both partners but those who own a small business or are entrepreneurs are perhaps hit the most. You cannot afford to grieve or be unsettled for a long time in the world of entrepreneurship. Furthermore, you cannot allow the divorce to set you back financially when you have already lost so much emotionally. That is why we offer you a small guide on how to get a divorce without hurting your small business in the process. As in all cases where legal issues are involved, it is also best to get advice from an attorney skilled at family law, such as those at Peters and May.

Early preparation

It would be considered a big faux pas to discuss any possible sharing of the property with your partner before you get married. However, by failing to prepare altogether, your small business will most definitely hurt. Signing a prenuptial agreement seems like a logical course of action to take, but it is not always mandatory. In fact, just subtly discussing the issue could get you far. The trick is to prepare early and possibly hold this precautions discussion even before you tie the knot.

To decrease the pressure, you could engage in the conversation using a joke or making the whole matter trivial. The end goal, regardless of how harsh and cold it may seem at first, is to enquire whether your partner would ever have pretensions over your business. Once you know this, you will be ready to take the right course of action in terms of legally binding contracts.

It’s never too late

Now, we must state here that determining whether your spouse is after your money or your company is more of a guessing game than an open and shut case. People change so you are definitely taking a risk getting married without a prenup. However, not all is lost if you enter a divorce dispute without a prenup signed, as there are post-nuptial agreements as well.

They usually tend to a change of reality in regard to the prenup, so they act as additional clauses to an existing prenup. In some instances, they can be signed without an exciting prenuptial agreement but those instances are rare. Because of their unusual legal nature, judges tend to scrutinize them before making the final ruling. Laws regarding post-nuptial agreements vary from state to state so be sure to check your state’s laws.

The financial disclosure

One of the biggest reasons why postnups are made is the regulation of the finances of both (former-to-be) spouses. They contain financial statements that help judges rule who gets more money or shares in a company even (that would be disastrous). Under most national family laws, spouses must disclose their finances before the final settlement can be agreed.

Such family law financial disclosure should best be done with the help of a family lawyer because frauds are not uncommon. By hiding incomes and twisting the final figures, former spouses hope to demonstrate to the judge that they are basically paupers and grab a portion of their former spouses’ estate. In the case of entrepreneurs, this could mean that your small business is at stake so you better lawyer up!

The trick of paying yourself a competitive salary

Most small business owners and especially entrepreneurs don’t hire a lot of people. What is more, they often forget to collect or pay out the salary they have designated to themselves because they wish to constantly reinvest in business growth. This is a sound decision to make but with the possibility of a divorce looming in the air, it might be wise to reconsider the amount you pay yourself.

If you left things as they were, your spouse or their lawyer (we told you to lawyer up too, remember?) could claim that all the money you earned while you were married went into the business. This would mean that you haven’t contributed anything to the home budget, which would look really bad in the judge’s eyes, especially if your business was generating a large turnover, measured in thousands of dollars. The trick is to raise your salary to a competitive level at just the right time before things start going awry in your household.

Separate and marital property

Your business is all yours, right? Well, not according to many family laws that recognize two forms of the property once you get married. Everything you as a couple own can either be marital or separate property and you two are the ones dividing it up and labeling it. In most cases, this is done pretty much by default in such a way that all the property you owned, respectively, before marriage remains separate property, while everything you received or bought while you were married becomes marital property. In the case of a divorce, the latter form of property is usually the object of the settlement.

In general, your small business should not become subject to the division of property. However, if you weren’t careful enough, things could change for the worse in no time. For instance, if you have opened a single shared bank account, your spouse could claim that they too are entitled to and have had a share in the business.

The easiest way to avoid such a scenario is to keep your business ventures away from any household issues and the home budget. By keeping things separate, you ensure you’re the sole decision-maker and that your firm will never become subject to marital disputes.


We hope that our small guide has helped you get a better picture of the status your small business has in the case of a divorce. If you prepare in advance, your hard-earned enterprise should not become something that the judge will decide on. In the end, every good entrepreneur knows it is best to be safe than sorry, so a long conversation with your spouse might help you avoid the shenanigans of divorce altogether.


Emma Williams is an Australian writer with a master‘s degree in business administration, who has a passion for anything lifestyle and design related. She spends most of her time redecorating and participating in house projects. As a great nature lover, her biggest pleasure is spending time in a small cottage by the river.     https://twitter.com/EmmaWilliams204

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