In a divorce case that involves a business, how is support determined?

If one of the spouses, whether it’s the petitioner or respondent, is operating the business and is receiving a paycheque or income from that business, it’s very arguable what the actual cash flow is for that person. The reason that becomes an issue is because people who own and operate a business, they want to pay as few taxes as possible, and during the marriage, that’s a joint effort — meaning you and your spouse, if you’re operating the business, wants to pay as few taxes as possible.

And what that means is, a lot of times people who own businesses will pay personal expenses or have certain things that people who get a W2, for instance, don’t have a chance to bury in their tax returns. A lot of times personal cell phones, car payments, insurances payments, gardeners, or any other expenses will be buried in the business expenses.

When parties decide to separate and one spouse earns his or her income from the business, a lot of times if there’s a dispute over what his or her income is from the business, a forensic accountant is either appointed jointly by the court or stipulated to do a joint cash flow analysis of that particular spouse’s income.

If there’s a dispute and there’s no stipulation, meaning no agreement to appoint a joint accountant, both parties can hire their own forensic accountants to determine cash flow and do a cash flow analysis from the business. For purposes of litigation or settlement, that person’s cash flow for purposes of providing support can be determined.

From offices in Seal Beach, the Law Office of Ann A. Thomson serves clients throughout Southern California in communities such as Seal Beach, Santa Ana, Brea, Yorba Linda, Fullerton, Corona Del Mar, Costa Mesa, Newport Beach, Irvine, Laguna Beach, Dana Point, Mission Viejo, San Clemente, San Juan Capistrano, Anaheim, Fountain Valley, Garden Grove, Long Beach, Huntington Beach, Norwalk, Torrance, Rancho Palos Verdes and Los Angeles.
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