Every divorce carries its own unique circumstances. If you’re self-employed, your divorce will have some additional considerations.

Child Support

Self-employed individuals must still pay child support. In Colorado, child support is calculated on a worksheet, which considers each parent’s gross income and the number of overnights with each parent.

For self-employed parents, “gross income” isn’t simply the business’s gross earnings. Instead, the Court uses the gross income of the business minus reasonable business expenses. This is where things can get tricky, especially if the owner is paying personal expenses from the business account.

If a parent is not working to his or her full potential while self-employed, income may be imputed to the parent, based on what the parent could be making.

When income is not consistent, you can often average the past several years to determine a reasonable estimate of income.

Property Division

If you started the business during the marriage, your interest in the business is marital property. Even if you started the business before the marriage, if it increased in value during the marriage, that increase is also marital property. In both scenarios, the business must be valued. This requires an expert to value the business.

When dividing the business, the Court will consider the following questions:
– When was the business established? If it was started before the marriage, then the business interest is the owner’s separate property.
– Has the business value increased during the marriage? If yes, then the increase is marital property, and the increase must be accounted for in the property division.
– What were each spouse’s roles in the business and how much did each party invest in the business?
– What’s the business’s overall value?

While not advised, the Parties can agree to continue joint business operations after divorce. If the case goes to court, the judge must award the business to one party or another, and cannot allow them to continue joint ownership after the divorce.

Self-employment and business ownership can be complicated, and require expert advice, both from financial and legal professionals. The professionals at South Denver Collaborative Divorce are here to help!

Katelyn Parker

Katelyn B. Parker, Esq
8400 East Prentice Ave., Suite 1500
Greenwood Village, CO 80111
Phone: (720) 213-6858

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