Incorporating a business in and of itself should have little or no impact on spousal support. When you think about it, incorporating a business only changes its form, and not its substance. The same income is earned by the business either way, and income is usually paid to the shareholder as wages or the owner as self employed.
Incorporating would also have some tax implications, including having income taxed at the corporate level and at the shareholder/employee level, depending on the form of corporation.
Problems arise when a corporation holds back paying the employee spouse and uses its income for savings, purchasing equipment, or other expenses which may or may not be justified for business reasons.
That may have the effect of reducing the employee’s income. When the person obligated to pay spousal support has his or her income reduced after incorporating, the recipient of support will often want to examine the corporate books to look for income earned by the corporation but not distributed to the shareholder/employee. If this situation occurs, you can count on more attorney fees and costs, more discovery (such as subpoenas), and probably the need to hire a forensic accountant to determine the income the employee has available for support.
Get in touch with our Spousal support attorney for more information on various aspects of spousal support.