How Will Your Divorce Affect Your Small Business?
You and your spouse started a business several years ago in Tampa and it has been a success. You’ve worked as a team to navigate the ups and downs of owning a small business. However, your personal relationship is now in jeopardy due to your spouse’s infidelity. So, you’re about ready to go it on your own but you just don’t know how your separation can impact your business.
Florida is an equitable distribution state so the business you started with your spouse occurred after your marriage. Therefore, the state considers this marital property as opposed to separate property (something you owned before your marriage). As marital property, the general rule is to split this asset or debt evenly.
As a joint owner, you will have to place a value on the business. How do you come to a fair value? If you both agree on a value, then you can move forward. If not, a business appraiser can use a number of methods to determine a value such as:
- Adjusted book value—This method uses a formula that looks at the business’s total assets minus its total liabilities.
- Comparable sales—If a business similar to yours is for sale, an appraiser can get an estimate of the value by comparing your business to the advertised asking price.
- Comparable values method—The appraiser investigates similar operations and appraisers to determine a basis for buying or selling a particular company.
- Capitalization of excess earnings—The appraiser combines the adjusted book value with the value of good will, an intangible asset that may produce income in the future.
Joint ownership of a business can complicate a divorce proceeding. Don’t try to go it alone. Call a family law attorney for advice and counsel as soon as possible. Contact us at (727) 531-8737.