Will My Self-Employment Affect My Divorce?
Each divorce is unique and comes with its own set of facts. If you’re self-employed, your divorce will have a few different things to consider. In this article, we’ll look at how your self-employment can impact your divorce.
Child Support
Self-employed individuals are still responsible for paying child support. Colorado uses a worksheet to determine the amount of child support, which is based on two factors: (1) the parent’s gross income; and (2) the number of overnights with each parent.
For self-employed parents, “gross income” is not the gross income of the business. Instead, gross income is calculated as the business’s gross income minus reasonable business expenses. If you pay personal expenses from the business, these amounts will NOT be deducted to calculate your gross income.
If your income is unpredictable, the Court may use an average of your last three years’ of income for use on the worksheet.
Property Division
If you own a business, it’s possible that your interest in the business is marital property. For a more detailed explanation of the difference between marital and separate property, please see my blog post here.
In short, if you started the business during the marriage, it’s most likely marital property. If you started the business before the marriage, any increase in value to the business is marital property.
If the business involves marital property, the Court will need to value the business and then determine how it will be split between the parties. Business valuations can be complicated and will require the use of an expert.
When dividing the business, the Court will consider the following questions:
When was the business started?
Has the business increased in value during the marriage?
What were the roles of each spouse in the business?
How much is the business worth?
How much has each party invested into the business?
The Court cannot Order the parties to continue operating a joint business after divorce.
Do you have more questions about your self-employment income, business ownership, or your divorce in general? Katelyn’s here to help!