Divorce For The Self-Employed: Minimizing Financial Impacts

Divorce For The Self-Employed: Minimizing Financial Impacts

7 February 2019
 Categories: , Blog

Finding out how much you owe for child support and alimony when you're getting divorced is never fun, but it's even less fun if you're self-employed and have an inconsistent income. Your self-employed status doesn't make you exempt from paying alimony or child support if the court deems either of those appropriate. You need to be aware of how being self-employed affects how these amounts are calculated and what might be expected of you.

The Three Main Problems

Alimony and child support are standard financial impacts after a divorce, but in your case, they can cause three main issues. One is that your income each year is uncertain, so the court will have to find a happy medium that you seem to be able to reach without a problem. Generally the court will look at your income minus reasonable business expenses. That leads to the second issue, which is that you'll have to have the amount available to send to your ex-spouse even in months when your income dips substantially below that medium amount you showed the court. The third issue is that the court determines what is an appropriate business expense. Expenses that you would have had to pay even if you didn't have the business are sometimes disallowed even if they seem business-related.

Your Records Matter

You need to start keeping very good records of your expenses and income. Talk to your attorney about this so that you know what amount of detail is appropriate. You need to show that your business expenses are strictly business-related, and you need a good way to show how your income varies over time. Yet you don't want to give so much detail that the court could find a way to disqualify the expenses and increase the amount of income that the alimony and child support could be based on.

Social Media Lockdown, Now

Something that may seem unrelated at first but that can affect the court's opinion is your social media use. Posts can be easily misinterpreted, and your ex-spouse's attorney could present your posts as proof you have more money or are doing better in business than you let on. Lock down your social media now, and block your ex-spouse and anyone who might give information about your posts to him or her. Yes, if you have mutual friends, that's going to be bad, so an alternative is to take a break from social media if possible. Discuss business social media accounts with your attorney because those likely can't be put on hold.

Meet with your divorce lawyer as soon as possible to figure out how to present your income. Self-employed income is notoriously difficult to pin down, and it's easy to do something that will make the court think you can earn more than you think is safe to allow. Your attorney can guide you through this process.