Running a Business With Your Spouse
Running a business with your spouse may seem like a great idea; you can spend more time together, work on a shared project and have more control over your family budget. But running a business with a spouse can actually be more risky than with a friend or partner. If the business goes bad, the marriage may, too. Couples also run a greater financial risk if both incomes are tied up in the same business.
The Risks of Running a Business With Your Spouse
When wedded in business also means wedded in marriage, you risk problems with both partnerships. The business partnership can take over the marriage, as business issues can be addressed at any time, day or night. Encroaching business concerns can also mean the end to romance as parties work to put out business fires and make the business grow. When one spouse makes a business mistake, the other partner in the business may have to confront his or her spouse about the error. Finally, the gender roles established in the marriage may not work so well in a business setting.
The Benefits of Partnering in Business With Your Spouse
While the risk of joining a marriage and a business is clear, some couples find that their strong marital relationship equals a good business partnership as well. Without searching high and low, these couples find that the trust, communication, respect and shared vision established in their marriages carry over to their businesses. Their individual strengths can also add value to the various business roles they take on.
How to Keep a Marriage and a Business Intact
First, build a wall between work and home. Many successful business couples find that a weekly night off together and boundaries about work conversations at home can give them the mental space they need to maintain a marriage and a business. Second, keep third parties involved in the business to act as mediators if necessary. An unbiased observer can keep both partners on track during business discussions.
Couples come to a marriage with different strengths, and that is true in business as well. Both partners in the business should acknowledge the value that different strengths add to the business. Couples should also consider keeping the marriage quiet when seeking investors. Many investors shy away from a business-marriage because of the risk involved. Finally, couples may want to consider hiring a third party to perform all accounting and financial tasks for the business.
What Does the IRS Have to Say About Business-Marriages?
The Internal Revenue Services does not have much to say about business-marriages, other than requesting that the parties properly account for their income from the business when they file their income tax returns. This is especially important to ensure that Social Security benefits for each spouse are counted correctly.
According to the IRS, a spouse who is employed by the other â€” that is, he or she is under the direction or control of the other â€” is subject to income tax and FICA. If, however, spouses are partners in a business that generates income, the business income must be reported to the IRS, and the spousesâ€™ respective shares of the income should be reported on the 1040 form whether they file jointly or separately. In addition, the spouses will have to pay self-employment tax on their respective shares of business income. Again, it may be better for the marriage and the business to hire a third party to prepare the tax returns â€” stress and strife can be avoided that way.
Preparing to Meet With Your Business Law Attorney
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