How Is a Small Business Valued in a Michigan Divorce?
A court may value a small business differently than other assets in a Michigan divorce. The court will consider the income-producing capacity of the business, as well as its potential for future growth.
This post will explore how a small business is typically valued during a divorce and what factors the court will consider.
How Is a Small Business Accurately Valued in a Michigan Divorce?
An accurate business valuation (your actual business worth) is critical to obtaining a fair property division during a divorce. The value of a small business is typically based on its income-producing capacity and future potential.
Some of the other factors the court may consider when valuing a small business include:
- Nature of the business
- Length of time the business has been in operation
- Profitability of the business
- Assets and liabilities of the business
- Location of the business
- Number of employees at the business
- Customer base of the business
If you’re going through a divorce and your small business is one of your marital assets, it’s essential to understand how it will be valued. Talk to a family attorney who can explain the process and ensure a smooth divorce settlement.
Risks of a Spouse’s Participation in the Business
A spouse’s participation in the business can also impact its valuation. If the spouse is an owner or has a significant ownership interest, the court is likely to give that ownership a higher value.
This is because the spouse’s continued participation in the business will likely result in greater income-producing capacity and future potential.
On the other hand, if the spouse is not an owner or has an insignificant ownership interest, the court is likely to give less weight to their continued participation in the business since there’s a greater likelihood that the spouse will no longer be involved in the business after the divorce.
It’s worth noting that this can be a complex process. That’s why it’s important to have an experienced attorney on your side to ensure that your interests are protected.
How Can I Protect My Business in a Divorce?
If you’re worried about the potential impact of a divorce on your small business, you can take steps to protect it. One option is to reach a prenuptial agreement with your spouse before marriage. This agreement can specify how the business will be divided in the event of a divorce.
Another option is to keep your business separate from your marital assets. You could do this by setting up a different bank account and keeping all business documents and records separate from your other records.
Contact an Attorney to Protect Your Small Business from a Michigan Divorce
If you’re going through a Michigan divorce and your small business is one of your marital assets, it’s important to understand how it will be valued.
At Gucciardo Family Law, our experienced attorneys can help you protect your interests and ensure that your business is accurately valued. Contact us today to schedule a consultation.
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