Small business owners in New York face unique considerations when it comes to protecting their ventures during a divorce.
There are practical ways to safeguard a small business during marital dissolution.
1. Clear business ownership structure
Establishing a transparent business ownership structure is necessary to protect your small business. Clearly define each spouse’s role and responsibilities within the company. This clarity ensures that the division of assets during a divorce is more straightforward, minimizing potential disputes.
2. Accurate financial documentation
Maintaining accurate financial records is important for protecting your small business. Clearly document business income, expenses and assets. This not only aids in the equitable division of assets but also ensures transparency during divorce negotiations. Accurate financial documentation is a valuable resource for both spouses and can expedite the legal process.
3. Business valuation
Conducting a thorough business valuation helps determine the true worth of your venture. A professional business valuation helps avoid disputes over the business’s value during divorce proceedings. It provides a fair and objective assessment, guiding the equitable division of assets.
4. Succession planning
Develop a succession plan for your small business to address what happens in the event of a divorce. Define who will take over the business or its management if one spouse exits. A well-thought-out succession plan ensures the continuity of the business and minimizes disruptions in operations.
Even though New York had a divorce rate below the national average in 2021, at 2.2 divorces per 1,000 population, people grow apart. For business owners, strategic planning can help them navigate divorce proceedings with greater confidence and protect their ventures.