In circumstances where one or both of the spouses in a relationship owns their own business(es), is self-employed, or is an entrepreneur, a number of special considerations will arise in family law.
Business owners will want to ensure that they are able to continue to operate their business during and after a separation or divorce. The spouse of a business owner will want to ensure that income from the business is properly assessed for the purposes of net family property equalization, child support, spousal support, and more. With these important issues at stake, it is crucial for business owners and spouses to seek legal advice early in the separation process.
At Gelman & Associates, our team of highly knowledgeable Toronto family lawyers has decades of collective experience representing business owners and spouses during separation and divorce. To ensure the best possible results for our clients, we strive to understand the unique characteristics of every business involved in a family law matter. Our focus is not only on providing exceptional legal counsel but also a positive customer service experience from the moment you contact our offices.
To find out how we can help with your divorce if a business is involved, contact us today to schedule a consultation.
Why Business Ownership Changes a Family Law Case
A business can be one of the most valuable and most disputed assets in a family law matter. Unlike a bank account or a vehicle, a business may involve:
- Fluctuating revenue
- Goodwill
- Shareholder loans
- Tax planning
- Retained earnings
- Compensation that does not neatly appear on a T4 slip
- And possibly more
In some cases, the central issue is not only what the business is worth, but also what income is truly available to a spouse for support purposes.
This is especially important because a spouse who is self-employed, or who controls a corporation, may have income that must be reviewed more closely under the Federal Child Support Guidelines. Those Guidelines allow the court to look beyond line 150 income and examine corporate financial statements, benefits, management fees, and expenses to determine a more accurate income picture for support purposes.
Business ownership can also complicate the timing and practical realities of separation. Some spouses need to preserve a company’s operations, avoid unnecessary disruption, and protect their employees while the family law matter is ongoing. Others need immediate disclosure because they are concerned that income is being understated or assets are being moved. These issues often overlap with division of property disputes, support claims, and domestic contract questions.
Business Valuation in Ontario Family Law Matters
One of the first major questions in these cases is whether the business itself must be valued and, if so, how that should be done. Depending on the circumstances, a business interest may form part of a spouse’s net family property for equalization purposes. A proper valuation may require review of corporate records, tax returns, shareholder agreements, financial statements, receivables, liabilities, and the overall nature of the enterprise.
A spouse should rarely attempt to handle this process without formal support. A business may have real value beyond the equipment it owns. For example, a professional practice or privately held company may have recurring contracts or revenue patterns that affect valuation. Where there are concerns about incomplete financial disclosure, personal expenses flowing through the business, or unusual changes in compensation, a more detailed financial review may be required. These issues often arise alongside broader property division disputes and can affect settlement negotiations in a significant way.
Income Determination for Child Support and Spousal Support
Business income and support are often linked, but they are not always straightforward. A spouse who owns or controls a business may receive compensation through salary, dividends, shareholder draws, retained earnings, or business-paid personal expenses. In Ontario family law cases, courts may look past the income reported on a tax return if it does not fairly reflect the spouse’s actual income.
That is why support cases involving entrepreneurs often require careful disclosure and analysis. Under the Federal Child Support Guidelines, courts can review corporate income and determine whether certain amounts should be included in annual income for support purposes. Spousal support may also involve additional analysis, including the use of the Spousal Support Advisory Guidelines as a practical tool in many cases.
If you are concerned that the other spouse’s business income is not being fully or fairly presented, or if you are a business owner trying to ensure the numbers are properly understood, early legal advice can make a critical difference.
Jointly Owned Businesses and Separation in Ontario
When spouses own a business together, the issues can become even more sensitive. In addition to family law claims, there may be day-to-day operational concerns, business debts, payroll obligations, client or supplier relationships, and questions about decision-making authority. The legal and practical realities of a jointly operated company often become much more difficult if the personal relationship has broken down.
In these cases, it is often important to stabilize the situation early. That can include preserving records, avoiding unilateral operational changes, reviewing corporate documents, and considering whether a negotiated arrangement can keep the business functioning while family law issues are addressed. Some matters may also benefit from a negotiated resolution through mediation or another out-of-court process, while others require more formal litigation steps.
Practical Steps To Take When Getting Divorced as Business Owners
| DOs when Getting Divorced and You Own a Business Together | DON’Ts when Getting Divorced and You Own a Business Together |
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How Can a Lawyer Help With Separations & Divorce That Involve Businesses?
Business owners and their spouses often have special concerns when dealing with family law matters, including:
- How to best assess the value of a business for the purposes of property division;
- How to ensure the continuation of a business during and after a separation and divorce;
- How to best determine a business owner’s income for the purposes of child support and spousal support; and
- How to best operate or divide a jointly owned business(es) following a separation and divorce.
Our Toronto divorce lawyers at Gelman & Associates have the knowledge and experience required to handle such complex personal and commercial portfolios. We understand that all businesses are unique and will examine the relevant structure, records, and financial history to work toward the best possible resolution of your family law matter.
When appropriate, we may recommend involving a qualified valuator, forensic accountant, or other financial professional so that business value and income can be assessed fairly and thoroughly.
If you are a business owner facing separation or divorce, it is important to put your best foot forward and be fully prepared for every stage of the process. In practice, that usually means getting legal advice early from a Toronto business owner and entrepreneur lawyer, maintaining proper records, avoiding impulsive changes to the business, and understanding how your company may affect support and property issues.
Pro Tip
If you want to make it through your divorce hearing successfully, it’s so important to put your best foot forward and be totally prepared for every court hearing that happens.
Contact Our Toronto Family Law Lawyers for Business Owners and Entrepreneurs
Contact Gelman & Associates to learn how our experienced business and entrepreneur lawyers can ensure the fair division of business assets during a separation or divorce. We provide our clients with the information and resources required to make informed decisions during a difficult period of transition.
In addition to the extensive web-based resources available on our website, all prospective clients are given a comprehensive family law kit during their initial consultation, with ample information and resources to help them understand and navigate the separation and divorce process.
Gelman & Associates serves clients across Ontario through offices in Toronto, Mississauga, North York, Scarborough, Whitby, Hamilton, Barrie, Aurora, Cambridge, Grimsby, St. Catharines, and additional locations. To discuss your situation, call (844) 736-0200 or use the firm’s contact page to book a consultation.
