Self-employment can be a blessing and it can be a curse, depending on what is happening in your personal life. Things can get really difficult when you are self-employed and need to file for divorce, or your spouse files for divorce. If this is the case, then you will have many questions that need to be answered so you can prepare for the process financially.
File for Divorce First
One of the strategies you must use when you are self-employed and headed for divorce is to file first, before your spouse. When you file before your spouse, you are listed as the plaintiff on the paperwork. This provides you with a couple of advantages, including your lawyer having the opportunity to argue first and the ability to direct the case in its early stages based on procedure.
Hire an Excellent CPA
As a self-employed individual, you should already have a strong CPA on your payroll. If this is the case, then you will not have to take any further steps. If you do not trust your current accountant, or have had issues with him or her in the past, now is the time to hire a more competent one. There will be plenty of tax issues that will arise during your divorce, especially since you are self-employed, and only a CPA will be able to handle them for you.
You will want to prepare a host of documents when filing for divorce as a self-employed person. While this list is not inclusive, it can help you to know where to start.
These documents include all of the following:
- Bank statements
- Check registers
- Tax returns for the last 3-5 years
- Life insurance policies
- Investment account statements
- Social Security statements
- Mortgage statements
- Titles to vehicles
- Financial info about your business
Research Local Laws
Depending on where you live, it is important that you research the local laws regarding divorce and small business. The laws you need to research include how a small business will be valued and divided during a divorce.
Operation of the Business
You need to inform your lawyer who operated the business during the marriage. If you were the owner and sole operator, then there likely will not be an issue as to who will operate it following the divorce. If both you and your spouse operated the business during the marriage, then this is an issue that will need to be addressed immediately.
Hire a Forensic Accountant
Consider hiring a forensic accountant to examine your small business. The forensic accountant will be able to find any value and goodwill your business has prior to the divorce. Finding out such information ahead of the divorce will help you determine a strategy and budget for the proceedings. Planning ahead by hiring a forensic accountant will also help you determine if your small business is even worth the fight in a divorce. You might spend tens of thousands of dollars, but your business might not be worth it in the long run.
We understand that divorce can be a painful subject. It can also be a confusing one when you are self-employed and/or own a small business. It is best to speak with an experienced family law attorney before making any decisions about your divorce so you do not make any rash decisions. Contact the Sarieh Law Offices today by calling 714-542-6200, or you can complete our online contact form and we will be in touch with you within 24 hours.