When going through a divorce in Pennsylvania, everything you own or are a part of will be reviewed. This means that, depending on the circumstances of your marriage, a portion of your business’ assets, profits and debts may become part of the settlement. This new change could have a direct impact on your day-to-day operations and may require some financial adjustments.
Co-owning the business
If the family law court awards your spouse a share of the business, you may need to reorganize the ownership structure. This can have both positive and negative effects. If you can work together effectively with your ex co-ownership may work. If not, the situation could quickly get difficult and messy.
The financial impact
Not only will you have a new partner in managing your business, but you may also need to divide up profits and debts with them as part of the settlement. This can lead to major cuts in income or an increase in expenses for you, especially if you are taking on additional debt from your ex.
A business’s value doesn’t only lie in its assets and finances; most survive because of the brand (reputation) the owners have built for years. If you are the face of your company, a divorce scandal can have a ripple effect and cause distrust among customers, vendors and investors.
Your mental health and changes to your ability to work
Divorce is stressful, confusing and painful, even in the best of circumstances. The added stress of dealing with a business can make it even worse. In addition, you may need to take more personal time away from the office while you attend court hearings and lawyer meetings. All this will undoubtedly affect your ability to stay focused and productive at work, which can further hurt your business.
The best way to make sure your divorce doesn’t harm your business is to prepare yourself beforehand. Consider researching the laws in Pennsylvania about separation that are unique to your case and find amicable ways to protect your interests. For example, if you don’t want matters of your divorce to become a public affair, you can explore avenues such as mediation or arbitration to settle your issues. Additionally, you can buy your spouse’s shares in the business if you want to keep it all to yourself.