Filing for divorce can be a challenging process under the best of circumstances. However, when you and your spouse jointly own and run a business, it can become even more complex.
Before the divorce can be finalized, the judge ruling over your case must know how much the business is worth and what you and your spouse would like done to it after your marriage is dissolved. You need to hire an experienced Texas divorce attorney to assist you in having your business fairly and accurately valuated.
Factors that Determine the Business’s Value
A number of factors will be taken into consideration when your business is valuated. These factors work together to determine the final price tag at which you and your spouse could sell your business.
The first factor that will be considered is the business’s assets. The assets include everything from its bank accounts to its inventory and equipment. Even the building and property in which the business is located will be appraised.
Once the cash value of these assets is determined, the Texas divorce attorney that you hire will then subtract from it the sum of your business’s debts. The amount of money left over is the cash value that your business is worth.
However, the cash value is only one aspect of your business’s valuation. The earning potential is the other half of the proverbial puzzle that will come into play when its full value is calculated.
The earning potential is determined in part by evaluating how much money the business typically brings in each month. The average monthly income is added up to determine the earning potential on a yearly basis. This sum combined with the value of the business’s liquid assets will be used to set a price tag if you and your spouse decide to sell the business.
Appraisal of Your Business
The judge assigned to your case will not be the one appraising the value of your business. It will be up to you and your attorney to hire a reputable certified public accountant to handle this important task.
Your attorney must hire a CPA who is licensed by the state and also has good professional credentials. You want to hire an accountant who can be fair and objective when determining how much your business is worth.
The word of a reputable CPA also will carry considerable weight in your divorce proceedings. The judge is more likely to listen to a highly respected and licensed CPA over one who has bad professional reviews and no credentials to back up his or her work.
Possible Outcomes for Your Business
After the business is appraised, you and your spouse can decide what to do with it. You can buy out your spouse’s share of the company. Alternatively, you can decide to continue working alongside your soon-to-be ex-spouse to run the business.
The judge may also order the business to be sold and the dividends divided between you and your spouse. This option could allow you to get a fresh start in life after your divorce. You also can walk away with cash that you can use to rebuild your life as a single person.
You can find out more about having your business valuated during your divorce by hiring a knowledgeable Texas divorce attorney. Call our law offices today at any of our convenient locations and get a free consultation.
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