An Orange County Family Law Attorney Discusses Valuing Businesses in Divorce Proceedings

Small Businesses Often Understate Income

Due to various reasons, the actual income of a small business may be different than its reported income. Therefore, yourOrange County family law attorney will stress the importance of ensuring that the operation’s income is presented as accurately as possible. Some steps to making this happen may include the following:

  • All the parties involved come to an agreement on the business income.
  • All the parties involved review the records and books of the business.
  • Experts are referred to for adjustment.

Fair Market Value vs. Fair Value

Orange-County-family-law-attorney-300x200Your Orange County family law attorney knows that assigning a business value is typically determined by one of two methods. One method assigns a business value based on its worth to an individual other than the owner; the other assigns a value based on what the owner believes the worth of the business is. This difference is known as fair market value vs. fair value. Substantial disparities in the value of business may arise when these different methods are applied.

Various definitions of fair market value exist, but your Orange County family law attorney will advise that typically, it consists of the amount a hypothetical buyer might pay for the business. Fair value, on the other hand, may be significantly subjective and usually depends greatly on context. For instance, fair value standards that are assigned in stockholder disputes have been adopted by some states; however, divorce proceedings may not always apply those exact same standards. Additionally, your Orange County family law lawyer knows that standards may differ within individual states, and that the terms are often used interchangeably, leading to confusion.

Contact a Family Law Lawyer for Counsel

An experienced Orange County family law attorney can assist you with the valuation of your small business. Call Bethanie Fanti at 714-505-3108 today to schedule a free consultation.

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