Divorce Involving Self-Employment

Serving Nassau & Suffolk Counties

Divorces involving self-employed individuals present unique challenges due to the complexity of assessing and valuing business assets, income, and subsequent financial obligations. When you own one or more businesses, whether you are in the trades, such as a contractor, plumber or electrician, a professional including doctors, lawyers, accountants, or mental health professionals, in the tech or finance industries, an entrepreneur or other self-employed person, self-employment adds a layer of complexity to the divorce process. Determining the value of a business, calculating income for support purposes, and protecting your financial interests require careful evaluation and highly experienced legal guidance.

Guiding Self-Employed Individuals Through Life’s Most Difficult Transitions

At Joseph Law Group, P.C., our attorneys are skilled in divorce cases involving self-employed individuals. We work closely with financial experts to ensure that your business assets are correctly valued, your income is accurately calculated, and your rights are fully protected. With years of experience handling high-stakes divorce cases, our team provides the talented legal advocacy you need during a challenging time. We focus on resolving these matters outside of court whenever possible and have an extensive record of success whether by settlement or trial.

Identifying Business Assets

Business types that may be involved in a divorce include:

Sole Proprietorships: In this structure, one individual owns and operates the business. The business’s income and liabilities are part of the owner’s financial estate.
Partnerships: A partnership refers to a business owned by two or more individuals, where each partner may have an ownership stake that could be subject to valuation and division in the divorce.
Limited Liability Partnerships and Companies (LLPs and LLCs): An LLP and an LLC provide some degree of personal liability protection to the owners, but the ownership interest may still be divided during divorce proceedings.
Corporations: S Corps, C Corps, all can be valued and that value subject to distribution in a divorce.

Documenting business income and expenses is essential to understanding the full scope of the marital estate. Accurate records, including tax returns, profit and loss statements, and balance sheets, help provide a clear financial picture. Gathering these documents early on can make the evaluation process easier and less expensive.

Valuation of Self-Employed Businesses

Valuing a business during a divorce is a complex process that often requires the expertise of financial professionals. Accurate valuation is critical to ensuring that business assets are divided equitably and when possible, without unnecessarily compromising the financial security of either spouse.

Methods for Business Valuation: There are several approaches to valuing a business, including the market approach, which compares the business to similar companies; the income approach, which looks at historical and projected earnings; and the asset approach, which focuses on the value of the business’s tangible and intangible assets.
Role of Financial Experts and Appraisers: A qualified financial expert or business appraiser can help determine the business’s fair market value by analyzing financial documents, assessing the value of equipment and inventory, and factoring in future income potential.
Goodwill and Intangible Assets: In addition to tangible assets, many businesses have significant intangible value, such as goodwill, brand reputation, or client relationships. These may be considered when determining the value of a business.

Dividing Business Interests

Under New York’s equitable distribution laws, marital assets must be divided fairly, though not necessarily equally. When a self-employed business is involved, the division of assets can become more complicated.

Protecting Business Interests: Our attorneys work with you to develop strategies to protect your business interests during divorce. Such strategies may include negotiating a buyout, structuring payments over time, or finding other creative solutions that allow you to retain control of your business.
Impact of Ownership Structure: How a business is structured—whether as a sole proprietorship, partnership, or LLC—can affect how assets are divided. Ownership stakes and the contributions of each spouse to the business are key factors in determining what is subject to division.

client filling out paper work next to attorney

Spousal Support Considerations

For self-employed individuals, determining spousal support can be challenging due to the difficulty in determining that income and the often fluctuating nature of business income. Accurately determining income is essential to ensure that support obligations are fair and reasonable.

Assessing Spousal Support Obligations: Courts consider several factors when determining spousal support, including the length of the marriage, the standard of living established during the marriage, and each spouse’s income and earning capacity. Proving income is essential for self-employed individuals to ensure a fair outcome.
Impact of Business Income: Business income can fluctuate significantly, depending on the industry or market conditions. Our attorneys help ensure that spousal support calculations consider these factors, minimizing the likelihood of unfair or unmanageable obligations.

Joseph Law Group, P.C.: Premier Divorce Lawyer for the Self Employed

Divorces involving self-employment require specialized legal representation to protect your rights and financial interests. At Joseph Law Group, P.C., we understand the complexities of these cases and provide knowledgeable, proactive advocacy that can make a significant and positive impact in the outcome.