Starting a business is exciting and demanding. You may pour your heart and soul into the business and most if not all of your time. Many times, you may not be concerned about potential issues that may seem far off if not far-fetched. Your focus has to be on the operations of your business to ensure that there will be a future.
So it is not unusual that sometimes a business may operate with only the barest of minimums when it comes to the documents that outline the rights, authority and responsibilities of those in the business. Corporate bylaws or multipage member agreements may seem as luxuries that other businesses can afford, but you may feel like it is unnecessary and something you simply don't have time for.
But what about divorce? You may not be married, and so feel it is of no concern. Or you may be happily married, at least at the beginning of your business. Or your married partner may also be your business partner.
When everyone is happy, detailed bylaws or exhaustive partnership or member agreements may be unnecessary. But what would happen if one of the owners needed to divorce. Their share of the business could very well be a major marital asset and what would happen if they need to liquidate part of that share for their divorce?
Without clear guidance, could their former spouse obtain a part ownership share in your business? And what if you and your spouse own the business? Could it continue to operate as a house divided? What mechanism would you use to divide your shares?
Like many legal issues, these are best decided when minds are clear and overheated emotions do not interfere with rational thought. So don't wait until a divorce is looming to discuss these issues with your businesses attorney.