You and your spouse have decided to end your marriage, but that’s not the only partnership you two will need to worry about. Co-owning a business heading into divorce can raise a lot of questions, but fortunately, there are a few answers for you to choose from.
Married couples share ownership in 3.7 million small businesses across the U.S. If you’re part of a marital partnership in business, you’ll likely have to determine just how you’re going to split it up. There isn’t a one-size-fits-all solution, so you may have to look at your options and decide what works for you and your partner.
Methods for division
Once you’ve gone through the process of finding out just how much it’s all worth, there are a few ways you and your spouse can handle things going forward:
- Buy-out: You could take over your partner’s shares through purchase. If there’s enough cash or shared assets for an even trade, you could walk away as the sole owner of your business. You could even avoid taxes, as sometimes asset purchases stemming from divorce aren’t considered taxable.
- Sell it all: If you and your partner don’t want anything more to do with the business, or there’s just not enough pliable assets to make the deal work, you could sell outright. You may have to dig into some more details, like how much you’re asking, who will run the business until it’s sold and to whom you’re willing to sell.
- Co-ownership: Though not always a feasible option, it can work. Sometimes putting your marriage aside can ease tensions that were seeping into the business, and you could see smoother sailing after a divorce. Of course, this option isn’t likely to be for everyone, but cooperation after a divorce is possible.
Each method likely holds some appeal, but it can be difficult to know which one you should select. Understanding what each one has in store could go a long way toward finding your solution.