Business Income in a Divorce: What It Is and What It Affects
By Orlando Business Divorce Attorney Eduardo J. Mejias
Practicing Exclusively Family Law Since 2011
Business Income is Gross Income Minus Expenses
As any business owner knows, gross income is substantially offset by expenses such as employee wages, office rent, business supplies, business travel, etc. Accounting practice, tax rules, statutory law, as well as family court judges, recognize this and deduct those ordinary business expenses from a spouse’s annual gross receipts to establish a true business net income.
Chapter 61 of the Florida Statues measures self-employment income as “gross receipts” minus “ordinary business expenses.” Incredibly, many clients and even some family law attorneys still confuse the concepts of “gross” and “net” income embodied in this definition. On more than one occasion, an opposing attorney has pointed to the gross total of annual income of a client’s business account as irrefutable proof of how much that client “earned” that year.
What Qualifies As Ordinary Business Expenses In a Divorce?
Not surprisingly, what exactly constitutes an “ordinary” business expense can occasionally generate controversy in a divorce. Business trips and meals, as long as they are not lavish in nature, usually qualify as legitimate business expenses. Conversely, if a client simply pays for a meal he had himself at Denny’s while on a business trip, he cannot deduct it from his income. Common sense usually prevails in these disputes.
Family Courts Require a Profit and Loss Statement
What do family law judges expect to see as a presentation of a spouse’s business income? Chapter 61 of the Florida Statues actually requires a self-employed spouse to file a profit and loss statement (also known as an income statement), in addition to a financial affidavit. This “P & L” statement usually can either cover the last calendar year, or the first several months of the current year. Courts will also rely on a professionally prepared income tax return to measure a party’s business income.
What a family court judge cannot do is simply estimate a business’s income based on conjecture. Nor will a family law judge simply accept a spouse’s self-serving and unsubstantiated estimate. With business incomes, only hard data is acceptable.
Business Income Affects Alimony and Child Support Payments
Many of my divorce clients are leaving marriages involved in a family business. Often, they were personally involved in helping their spouse run the business. Other times, one divorce client pursued a separate career, while the other spouse operated the business. In either case, the income derived from the business needs to be established with precision because it affects the amount of any child support or alimony payments.
How AAA Family Law Can Be Of Service
If you or your spouse are business owners involved in a divorce, I encourage you to call AAA Family Law at (407) 260-6001 and schedule initial consultation at our Altamonte Springs office or by phone.
At the consultation I will: (1) listen to the family law issues that you are experiencing, (2) propose to you a plan of legal action to meet your objectives and (3) quote you a fixed attorney retainer fee before you sign a contract or make any payment, not an hourly rate whose total is not predictable.
These are the ranges of attorney retainer fees at AAA Family Law. The actual fee depends on the estimated amount of time that the work will take. For more information on retainer fees see and court costs, read Our Retainer Fee Policies.
Contested Divorce Up To Mediation: $2,000 to $3,000. (An additional retainer amount is set before a trial if there is a trial.)
Uncontested Divorce: $1,000 to $1,500.
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AAA Family Law
283 Cranes Roost Blvd., Suite 111
Altamonte Springs, Florida 32701
AAA Family Law is located in Altamonte Springs and serves clients throughout the Orlando Metro Area including, but not limited to, the following cities and unincorporated areas, by county: Orange County: Apopka, Bay Lake, Maitland, Ocoee, Orlando, Union Park, Winter Garden, and Winter Park; Seminole County: Altamonte Springs, Casselberry, Lake Mary, Longwood, Oviedo, Sanford, and Winter Springs; Volusia County: Daytona Beach, DeBary, DeLand, Deltona, and Orange City; Lake County: Clermont, Leesburg, and Mount Dora; Osceola County: Buena Ventura Lakes, Celebration, and Kissimmee; Orange, Lake, Osceola, and Polk Counties: Four Corners; Orange and Seminole Counties: Goldenrod.