Divorce and the Impact on Your Business

The first thing to remember is don’t panic!


Lots of small businesses are run through limited companies, usually because this is a more tax effective way of drawing income. The directors pay themselves a small salary and the rest of the income comes as dividend. Often these businesses don’t own any assets except perhaps a vehicle and some equipment. A quick look at the annual accounts for the business will show that it has no real value and the only thing we really need to look at is its income.

With a bigger company which owns substantial assets and has a substantial turnover, it is probable that the shares in the company will have to be valued, usually by an independent accountant who will meet the directors and examine the books.

The accountant will prepare a detailed report giving their opinion of the value of the shares and how easy it would be to draw money out of the business without damaging it. A small number of shares with little influence over the running of the company may not be worth much even in a big company. If the shares allow the owner to control the company then they will be worth a lot more.

It is extremely rare that a sale of the shares would be contemplated but if they have any value they will be included as one of the family assets. Usually you’ll keep your shares but the value will be set off against the other family assets.

If you have any questions regarding this issue, please contact Martin Loxley on 0114 2744237 or martin.loxley@irwinmitchell.com