You and your spouse started a business together years ago. It began as a side hustle and then grew into a profitable enterprise. Now, as your marriage comes to an end, that business—once a shared dream—has become a source of tension. How do you fairly divide something so integral to both your financial future and your identity?

At Blake & Pulsifer, PLC, we know that divorce is even more complicated when businesses are involved. That’s why our Tempe divorce lawyers work tirelessly to value your business and assets and help you safeguard what you’ve spent years building. Our team of experienced family law attorneys in Tempe can help you understand how Arizona’s community property laws might affect your business during your divorce.

Understanding Community Property in Arizona

In Arizona community property laws, most things you and your spouse earn or buy during the marriage are owned equally. This includes businesses—or at least part of them—if they were started or grew during your marriage.

  1. Separate Property: Assets owned before the marriage, gifts, and inheritances are typically considered separate property and are not subject to division.
  2. Commingling: If separate property (like a business started before marriage) was mixed with marital funds or labor during the marriage, it may become partly or entirely community property.
  3. Fair Division: While community property laws aim for a 50/50 split, courts prioritize fairness, especially when unique assets like closely held businesses are involved.

Understanding whether your business interest is community property, separate property, or a mix of both is the first step in determining how it will be divided.

Figuring Out What the Business Is Worth

Before deciding who gets what, you must know how much the business is worth. This process is called a business valuation, and it’s usually done by a professional appraiser.

How Do You Value a Business?

There are three common ways:

  1. Market Approach: They compare your business to others that have sold recently.
  2. Income Approach: They look at how much money the business makes and estimate what it could earn in the future.
  3. Asset Approach: They add up everything the business owns (like equipment or property) and subtract any debts.

Each method works differently, and the appraiser will choose the one that makes the most sense for your business. 

Dividing the Business

Once you know the value of the business, the next step is deciding how to divide it. There are a few options:

  1. One Spouse Keeps the Business: The spouse who keeps the business can “buy out” the other spouse’s share. This could mean paying them cash, giving up other assets (like the family home), or setting up a payment plan.
  2. Sell the Business and Split the Money: If neither spouse wants to keep the business, you can sell it and divide the profits. While this option might seem simple, it can take time to find a buyer and agree on a price.
  3. Run the Business Together: Some couples agree to keep running the business together, even after the divorce. This only works if you trust each other and can set boundaries.

What Makes Dividing a Business Tricky?

Dividing a business during a divorce isn’t easy. One common challenge is disagreements over the value of the business. An appraiser may set a value that feels too high or too low, depending on your perspective. This can be frustrating, especially if you think the valuation isn’t fair. In these cases, you can bring in another appraiser for a second opinion. Having a trusted Tempe divorce attorney on your side can also help keep the process fair and make it easier to work through disagreements.

Hidden assets can also be an issue. Sometimes, one spouse might try to make the business look less valuable by hiding profits or inflating expenses. When this happens, a forensic accountant steps in. Their job is to comb through the records, uncover anything missing, and ensure the business’s true value is clear.

Taxes are another factor to watch out for. Dividing or selling a business can lead to big tax bills, like capital gains taxes or penalties, if retirement funds are used. These costs can catch you off guard if you’re not prepared. 

Contact Our Tempe Divorce Lawyers Today

Your business is more than numbers on a balance sheet—it’s a reflection of your hard work and vision. Ensuring it’s handled fairly during a divorce is about protecting what you’ve built and securing your future. At Blake & Pulsifer, PLC, our divorce attorneys have the experience and insight to guide you through this process with confidence.

Don’t let uncertainty hold you back. Call us today at 1-480-838-3000 or fill out our confidential contact form. Together, we’ll create a plan that works for you and your business—so you can focus on what’s next.