If you are a new business owner looking to ensure your business has complete protection against claims, you will want to think about what would happen if you or another owner gets a divorce.
The law will look at a business you start after you become married as marital property unless you take steps to keep it separate. As martial property, the court can divide ownership between you and your spouse in a divorce.
Give yourself a salary
You should pay yourself as you would any other employee. This will establish the business as a separate entity while also creating an income for you that becomes the marital property. It will be easier to claim the business is separate if you do not use money coming directly. Separating yourself out as an employee earning a salary gives you a distinct asset that the court could divide.
Create a partnership agreement
If you start the business with others, create a partnership agreement that includes a clause about what happens in a divorce situation. This will also protect your business by allowing other partners to buy out the ownership or set expectations on what will happen in order to protect the business.
Keep good records
You want to keep excellent records for your business. This will help to show where the money came from and went. It will give you a roadmap to follow when determining the categorization of your property in a divorce.
If you do not take proper steps to safeguard your business, it is highly likely you will lose it in a divorce. You will be left with the only option of buying out your spouse or working with him or her to keep your business going.
