Children must be the first priority in a divorce situation. When one or both parents are self-employed, there are ways to calculate child support payments based on income according to family law in Canada. Child and spousal support calculations are usually based on income, so it can get a little tricky when the parent paying support is an entrepreneur. The courts want to see full financial disclosure.
People who are self-employed usually deduct business expenses from their income. For child and/or spousal support purposes, a court will ascertain whether some of those expenses are unreasonable and may tack those back onto income, which it will use to come to a support payment amount. If a judge feels that adequate disclosure of income hasn't been made, he or she can presume certain expenses were for the person's own benefit and include them as income.
Equity in sole proprietorships are usually divided between divorcing spouses. If an incorporated business is involved, value of business shares is considered matrimonial property. When it comes to actually evaluating the business, calculations can be done based on what someone would actually pay for it. But for the most part, a judge wants to see hard evidence which could mean seeing financial statements, bank account statements or tax returns.
There is no doubt that entrepreneurship comes with benefits. However, it should not be used as an excuse to pay less in child support or spousal support in Canada. A lawyer may be able to help his or her self-employed client to determine an adequate support payment -- one about which both individuals can agree. Having the advice of an experienced lawyer may mean not having the courts involved.