You might think that divorce can only bring ugliness into your business. But considering the rates of divorce in the U.S., you might be thinking if it’s possible to keep the business you own with your future ex-spouse alive. It might just be in the realm of possibility, and it might not even happen. But sometimes, our minds wander to these thoughts and ask ourselves, what if?
Well, your thoughts might keep your business alive in the future where the divorce becomes a reality. It’s still possible for a company that you own with your ex-spouse to thrive. It’s not going to be easy, but it’s not impossible. But before we get into how to do that, let’s first explore what it means to own a business with your spouse.
Legally Owning A Business With Your Spouse
There are a lot of ways to go when owning a business with a spouse. A lot of legal issues, as well. But let’s generalize it to make things less complicated.
The first possibility is that you’re the owner, and your spouse is an employee. This is called a sole proprietorship, and it’s easy to start and manage. It’s the most straightforward choice for any married couple who wants to start a business. It’s also the simplest business structure to overcome if you and your spouse decide to divorce. If your spouse no longer wants to be in the business after a divorce, they can just leave, and you won’t have to liquidate the business for it. If they’re okay with being an employee in your company after the divorce, that’s fine too, but they can’t make executive decisions for the company.
The second possibility is that your partner is a partner in your business. This is called a partnership. A partnership means that you own a part of the company while your spouse owns the other. This is the simplest form of partnership. This is assuming that you don’t have any other partners involved in your business.
It’s a much-complicated business structure to overcome after a divorce because your ex-spouse can still make executive decisions for the company. Partnerships don’t necessarily need to have a written agreement. Still, it’s suggested that you do, just in case of a divorce. We can also put the other possibility here, as having a corporation or an LLC is much like a partnership, but with more legal paperwork and more shareholders.
The last possibility, and it’s only an option that married couples have, is a qualified joint venture. This kind of business structure is probably the hardest to overcome in cases of divorce, simply because you both own the business together. Unlike partnerships or LLCs, your ex-spouse can’t just opt to take their share and walk away in a joint venture. You must both agree to jump ship once the divorce happens or work together until the end.
Choosing the right business structure is already half the battle for preparing for a future with your spouse. It can determine the expectations you can have with one another when owning a business and what you can do once your relationship falls apart.
Making It Work
So let’s say it does happen. The divorce attorney comes to you, legalizes the divorce, and you’re free from your ex-spouse. But not from the business you’ve brought up together. So it’s still up to the both of you to keep it alive. But how is that possible? A lot of thoughts might enter your head, but you’ll have to concentrate them on the business and yourself.
The first thing you should do is take time off. A divorce is a lot to handle, and seeing your ex-spouse at work is the last thing you want to happen. By taking a vacation and away from the business, you ease into this idea and start to accept it. And you should be accepting the fact that you and your ex-spouse still own a business together, and you’ll have to work with them to make it thrive.
It’s time to go back to the drawing board. It’s like starting your business all over again. It’s time to set expectations with your ex-spouse. You’ll have to know what they think of the company and where they want it to go into the future. By setting expectations, you’ll see what you can do to supplement their plans or even reject them. It might take some time, and it might bring a lot of bad memories, but know that setting expectations can make or break the business you’ve spent years managing together.
This might be the hardest thing to do, considering that you’ve grown to love and hate the person you’re working with. But letting that get in your business is the prime ingredient to its downfall. Keeping it professional means to work together as employees, so you refer to each other as employees, and you think of each other as employees. It might be hard at first, but it gets easier as time goes on.
Owning a business with an ex-spouse is a challenging undertaking. But it is a road you have to take if you want to keep your business thriving. However, remember that you should have an end goal in mind. You shouldn’t think that you’re going to keep the company in the end, or you’ll find a way to kick your ex-spouse out of it. That’s an unhealthy way to run a business, and it will affect your venture altogether. Once you’ve reached your end goal for the company, it’s time to let go and build something else for yourself.