How Are Businesses Evaluated During a Tampa Divorce?

You’re likely aware that your marital estate will be divided into two separate estates, yours and your spouse’s. Many folks think this relates to the family home, personal vehicles, and furniture, but there are other types of property that need to be considered. If you’re a business owner, your company might also be subject to division. First, it must be determined whether or not it is separate or marital property. If it is marital property, then a valuation must be conducted to determine how much the business is worth. In this article, we’ll go over some of the nuances of dividing a business during a Florida divorce.

Is the business considered separate or marital property? 

Whether or not your business is subject to division during your divorce depends on whether or not it’s considered marital or separate property. Separate property refers to assets and debts that one spouse acquired prior to the marriage or after the date the divorce petition was filed. Marital property refers to assets and debts that were acquired during the marriage.

If a business was started during the marriage, it is generally considered marital property. The one exception to this rule is if there was a prenuptial or postnuptial agreement in place that stipulates that the business is considered separate property.

Many folks think that if they started the business before the marriage, it is automatically considered separate property. This isn’t necessarily true. Any time that marital or separate property is commingled, the asset becomes marital property. So, if profits from the business were used to support the household, the business could be considered marital property. If you are a business owner who is going through a divorce, it is imperative that you speak with a Tampa divorce lawyer who can help you determine whether your business is marital or separate property.

How are businesses evaluated during divorce? 

In general, there are three ways to value a business during divorce. These include:

• The profit approach – This is usually the way that businesses are valued during a divorce. The value of the business is determined by the business’s present or anticipated profits. If the value is based on the future value of the business, an appraiser will apply a specific formula for determining its worth.

• The market approach – An appraiser will find comparable companies and use them as a guideline for determining the business’s value.

• The cost approach – Also known as the asset-based approach, this approach uses the theory that a buyer will not purchase the business for more than the value of the company’s assets. This approach also accounts for the business’s debts.

Talk to a Tampa, FL Divorce Attorney Today

 Westchase Law, P.A., represents the interests of Tampa residents during their divorce proceedings. If you need to divide a business or any other complicated transaction, our experienced attorneys can help you through the process. Call our Tampa family lawyers today to schedule an appointment, and we can begin addressing your concerns right away.