Small Business Owners’ Divorce Guide
Are you a small business owner going through divorce? Don’t let divorce ruin you. Read this.
America is the land of opportunity for small business owners. The independence! The flexibility! The tax breaks! When I got out of law school, I never thought I wanted to be a business owner. All I wanted was a glass door with my name on it and an elevator taking me there. Soon, it became handcuffs and prison and today, I cannot imagine working for anyone else.
Here are some of the financial benefits of having your own business:
- You can employ all of your family – including your 9 year old.
- You can give your spouse a 401k.
- You can employ any of your children,give them their first ROTH IRA at age anything (7 even) and watch the power of compound interest!
- You can deduct anything business-related.
- If you own the building on which you do business, you can deduct the rent you pay, and depreciate the building. and so on and so forth.
However, all of these financial benefits can cost you – like anything else, if you go through a divorce. In the game of Life, if your spin lands on “divorce”, you go bankrupt. Let’s prevent this from happening.
1. If you own a small business, you need to get a prenuptial agreement before marriage.
The most expensive part of divorce are the lawyers and accountants and other experts. Each one is billing 250 – 1250 per HOUR for their time. If you have a TEAM of experts, it is entirely possibly you are paying 3500 – 5000 per HOUR. The thing about having a small business is that you receive lots of financial perquisites. Perquisites are nice for your spouse when he/she is receiving them. Once you cut them off with a divorce, they will want to continue to get these “perks”. They will want to VALUE your business. They will want to say your business is worth 100 trillion dollars so they can get half. You will want to say your business is worth 0 because you don’t want to give that lazy self-entitled asshole NOTHING. You two will fight tooth and nail and spend $200,000 fighting over $20,000 because you do NOT have a prenup!
IF you have a small business, get a prenup. Make your business separate.
2. Do NOT work with your spouse.
The people I know who have been married for 50+ years all tell me the secret to a long marriage is to have 2 separate rooms you can go to every day. I don’t care if you are Ryan Gosling. If I am forced to spend more than 8 hours a day in a room with you, I will tire of you like I tired of oatmeal (and I literally ate oatmeal every day for 2.75 years after the birth of my first so I could produce my olympic-sized swimming pool’s worth of milk). I never thought I would tire of oatmeal, but – I’ll NEVER eat it again. Blackjack? I played it until I now play Poker instead.
In fact, if you do not work with your spouse, you have a less likely chance of divorce, so you can protect your business that way.
If you DO work with your spouse, understand that even if you have a prenup, they may have a legal reason to challenge it.
If you own a small business, and you do NOT have a prenuptial agreement in place, you are risking having an EXPENSIVE divorce, which means you could lose your business. It is NOT worth it.
Get a prenup.
Marriage is grand; Divorce – a hundred grand!