Married small business owners often overlook a common reason why some businesses fail: divorce. In most states, one spouse's small business can be considered a marital asset or marital property. When a couple divorces, assets need to be divided, and that small business can be a couple's largest asset. That's why it's important to make sure your business is divorce proof from the outset.
Fortunately, there are ways to protect a small business after a divorce has been filed. Nonetheless, it is a good idea to protect the business from division before divorce happens. To understand your situation, you first need to know if your business will be separate or community property.
If you forgot to divorce-proof your business before filing for divorce, your only option may be to give up other assets, such as the house, cars, or retirement accounts in order to maintain control of your business.