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Impact of divorce on a small business

On Behalf of | Mar 29, 2021 | Divorce

Owning a small business in Alabama presents its own array of challenges, and a whole new set of complications can arise when a married couple involved in the ownership of a small business decides to divorce. A marriage dissolution has the potential for impacting a small business in a number of different ways.

Dissolution of small business in a divorce

Not all small businesses shut down after a divorce. However, there are instances in which the dissolution of a small business makes sense from a financial perspective. For example, if a married couple jointly owns a small business, dissolution may be advisable if they cannot continue to run it together once separated.

Disruption of day-to-day business operations during a divorce

Another way in which a divorce has the potential to impact a small business is that the process of ending a marriage can be disruptive to the owner’s personal life. The mere fact that a marriage is ending demands time, effort and concentration from both spouses, taking that focus away from the business.

Books and records of a small business become subjects of a divorce

Financial and other records associated with a small business typically become part of divorce proceedings. In other words, the books of a small business will be opened either voluntarily or by order of the court in order to facilitate decisions in marriage dissolution proceedings.

Employees of a small business can also be impacted when the owners divorce. A couple who has decided to end their marriage should be aware of the impact that the process is having on employees and others associated with that enterprise. The business owner may want to work with an attorney throughout the process to explore their options going forward.


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