A small business is a source of pride for many people. For those with a family business, going through a divorce is a major life change that can also significantly impact the company that they may co-run with their spouse. Minimizing impacts on the business is often a priority if this kind of company is to remain operational after a divorce.
While some people opt to close a family business or have one spouse buy the other one’s share of the company, others may continue to run the business together. If that’s what you’re doing with your family business in the wake of your decision to divorce, it’s going to be important to be thoughtful about the following.
Separate business and personal matters
One of the most important tips is to separate business from personal matters. This involves maintaining professional communication to ensure personal disputes don’t interfere with business operations. Exes must compartmentalize their relationship to ensure all decisions are based on what’s best for the company.
Outline designated duties
Both parties must have clear expectations of their individual contributions to the business. This helps prevent overlap and confusion and reduces potential conflicts. Determining these roles should involve each party agreeing on the specific tasks and decisions they are responsible for.
Set pay structure and financial responsibilities
Another critical aspect of co-owning a business after divorce is setting a clear and fair pay structure and plan for business expenses. This includes agreeing on how profits are distributed, investments are made, and losses are covered. Establishing points can prevent misunderstandings and disputes over money.
Put everything in writing
Everything related to running the business should be put in writing. This ensures there’s no chance for either party to misconstrue the agreement. It may be necessary to review the agreement periodically, but any updates or amendments should also be in writing.
Having a legal representative to assist with getting an agreement in place and to help determine how your ownership and/or interest in your family business should factor into the property division is critical. Making sure the business doesn’t suffer because of the divorce has to be a priority, but you can’t lose focus on protecting your interests during the process either.