Business divorce also known as business separation or dissolution, is the process of ending a business partnership or venture. It can be a difficult and stressful experience, particularly when a business is successful and profitable. However, sometimes it becomes necessary to dissolve a business due to conflicts between partners, changes in the market, or personal reasons. If you and your business partner(s) are considering a business divorce, it's important to understand the legal and financial implications of dissolving your business.
Determine the Why. Perhaps you own a business with your spouse and are now divorcing your co-owner and spouse. Dissolving a marriage is often a difficult and emotionally charged process, and it can be even more complicated when a couple owns a business together. It's important to identify the root cause of the dissolution, as this can affect the way the business divorce is handled.
How will the law impact this decision? It's a good idea to consult with a lawyer who has experience in business dissolution. If one spouse is keeping the business, it's important to update any legal documents such as contracts, leases, and licenses to reflect the change in ownership. An attorney can help you understand your legal rights and options, and guide you through the process.
Have you and your partner assessed the financial impact of dissolution? Dissolving a business will have significant financial implications, especially if the business is profitable. It's important to consider how the dissolution will affect the business's assets, debts, and any ongoing contracts or agreements.
Key Financial Questions to Consider:
- What is the value of the business. This can and should be determined through a professional business valuation, which takes into account the business's assets, debts, and profits.
- Once the value of the business has been determined, the couple should contemplate whether or not the business should continue to run. Will you run the business together as divorced spouses? Perhaps one spouse will run the day-to-day operations. Alternatively, perhaps both partners prefer to sell the business.
- What are the tax implications? When a business is transferred as part of a divorce settlement, there may be tax implications. It's important to consult with a tax professional to understand any potential tax consequences.
- Does the business have any outstanding debts? If so, those debts will need to be addressed.
At Bop Services we work with highly qualified professionals from around the country. If you have your own experts, our team will work to meet your needs and coordinate with your team. If you do not have your own experts, we will gladly connect you with our network of experienced professionals who specialize in business valuation, tax advice and planning, accounting and financial services.
As in life, communication is key during a business divorce. It's important to have open and honest conversations with your partner(s) about the dissolution, and to work together to come to a mutually beneficial resolution. Mediation can minimize the impact on the business and its stakeholders, as you move forward with your lives and careers.
Schedule a consultation with a mediator to learn more about the business of the possible with Bop Services.
