Why Small Business Owners Deserve Special Attention During Divorce Proceedings

During divorce proceedings, it's critical to pay special attention to individuals who own small businesses. A common assumption is that the division of assets will be clear-cut and straightforward. However, when a small business is involved, the financial landscape becomes much more complex.

Small business owners often have a greater ability to manipulate their income compared to salaried employees. They can underreport income, shift personal expenses into the business, and even hide assets, making it challenging to gain a clear and accurate picture of their financial situation. This can lead to an unfair settlement during divorce proceedings as any underreported income or hidden assets will not be considered during asset division.

Let's take an example of underreporting income. A business owner could decide to delay signing new contracts or receiving payments until after the divorce, thereby reducing the income visible during the process. They might also move personal expenses to their business, artificially decreasing their net income on paper, when in reality, their actual cash flow remains unaffected.

So, when navigating a divorce involving a small business, it's critical to engage financial experts who can scrutinize business financials, identify discrepancies, and ensure an equitable distribution of assets. Remember, understanding the true value of a small business is an essential step towards ensuring a fair divorce settlement.