Calculating Child Support Sometimes a Complex Process for Small Business Owners

Illinois laws pertaining to child support amounts couldn’t be more clear and finite – a non-residential parent is required to pay 20% of his net income to support one child, 28% percent for two children, 32 % for three children, and so on. That makes for a cut-and-dry calculation for parents who receive a salaried paycheck from their employers. In most cases, the child support calculation is based on their take-home pay. For many people, a statutory child support payment is easy to determine.

However, when the non-residential parent owns his own business, child support calculations can become difficult to navigate. Particularly when the parent owns a business that deals heavily in cash – such as a liquor store or a restaurant – a spouse or residential parent may suspect the other party of “skimming” cash from the business for the purpose of minimizing income to avoid child support obligations. Non-cash-based businesses are also subject to scrutiny. Tax-deferred loans, reinvested profits, and expense accounts can come under the judicial microscope as ways for business owners to obscure income. Even business owners who play the straight-and-narrow can fall victim to another attorney’s suspicions.

The result is sometimes a complex legal battle. If the parties cannot agree to the amount of the non-custodial parent’s “net income,” they must engage in a lengthy review of three years of financial statements – bank accounts, credit cards, loan records, receipts and tax returns – to try to determine the business owner’s true net income. This process can take months.

Parents who own their own businesses are advised to hire an attorney to deal with child support matters. Attorneys are best able to sort through income issues and ensure that their clients are not charged with unfairly large child support payments. Attorney are also in the best position to present these numbers in a way that makes sense to a family court judge. This is key to achieving a good result in any case.