When a sole proprietor contemplates the prospect of divorce, a wave of uncertainties may flood their thoughts.
Among the concerns that arise, the fate of the business is a significant one. In Ohio, marital dissolution involves considerations that extend beyond personal matters, as the business entity becomes entangled in the legal process.
Business structure matters
The structure of the business plays a key role in determining the extent to which divorce proceedings affect it. A sole proprietorship, being a business owned and operated by a single individual, is directly linked to its owner. Unlike other business structures, such as partnerships or corporations, the sole proprietorship lacks a separate legal entity. This characteristic makes the business vulnerable in the face of divorce.
Division of assets
Ohio follows equitable distribution principles in divorce cases. This means that the division of marital property happens fairly and equitably. The assets acquired during the marriage, including the sole proprietor’s business, are subject to this distribution. In this context, the business may be marital property, and its value could be part of the overall settlement.
Determining the value of a sole proprietorship can be a complex task. The business owner may need to provide a comprehensive assessment, taking into account factors like revenue, expenses and market conditions. Valuation challenges can further complicate divorce proceedings, potentially impacting the final outcome for the sole proprietor.
With Ohio having a divorce rate of 2.6 divorces per 1,000 population in 2021, dissolving a marriage is not uncommon. For business owners, divorcing means preparing for additional challenges to safeguard what they built.