As an entrepreneur, your business is part of your identity. While everything may seem to have become topsy-turvy during your divorce, you may find some stability by focusing on your company. Nonetheless, if your business is marital property, you could lose it after a divorce.
Texas judges usually split marital property evenly. If you are hoping to keep ownership of your business after a divorce, you likely need to think about preventing it from becoming marital property. While far from an exhaustive list, here are some basic suggestions.
Pay yourself a decent wage
When building a company, many business owners opt to reinvest proceeds instead of paying themselves a decent salary. This approach may cause problems during your divorce, though. If you regularly bring home enough money to keep your soon-to-be ex-spouse happy, he or she may not care if you keep the business after your divorce. On the other hand, if your partner believes they are making sacrifices for the long-term success of your company, he or she may assert an ownership interest during divorce proceedings.
Keep your spouse out of your company
Growing a new business often requires asking friends and family members for help. Involving your spouse in the business, however, may be a recipe for disaster. That is, your partner may argue that he or she has contributed enough sweat equity to qualify for an ownership stake. If you keep your spouse out of your company, you undercut this argument.
Avoid commingling family and business assets
For a variety of reasons, keeping your business separate from your marriage makes sense. If you are considering divorcing your spouse, though, it is absolutely essential. When you use marital accounts to pay for business expenses or vice versa, you blur the lines between what belongs to you and what belongs to both you and your spouse. Accordingly, you should never commingle family and business assets or expenses.
When deciding whether your business is marital property, a judge is likely to consider several factors. If you intend to keep your business after your divorce, you must do what you can to separate your business from your family life.