Entrepreneurial couples are quite common. Small businesses owned and run by couples provide the foundation for convenient and cost-effective business ventures when the marriage is sound.
In Tucson, 36 percent of the population is married, according to the U.S. Census Bureau.
An article from “Reference for Business” (tinyurl.com/puj7x65) cites several factors that account for the success of a spouse or domestic-partner business venture, including:
- Newlyweds should exercise caution prior to partnering for business.
- Objectively assess whether you and your partner would work well together in a business
- Both partners must bring significant value to the business and should not be competitive with each other.
- Good communication cannot be overemphasized.
- Partners must adapt to changing roles that life can create, and keep work life and home life separate.
- Set aside time away from your spouse or partner.
According to Small Business Administration blogger Caron Beesley, the legal and tax implications are significant considerations (tinyurl.com/qa6t786).
For federal tax purposes, an unincorporated business jointly owned by a married couple is classified as a partnership. Each spouse has equal say, share of business affairs, equal operational and capital contributions but there are filing and record-keeping requirements.
Under the Small Business and Work Opportunity Tax Act of 2007 a qualified husband and wife venture also can be treated as sole proprietorships for federal tax purposes if (details at tinyurl.com/mgktgun):
- The wife and husband are the only members of the joint venture and file a joint return;
- Each spouse contributes materially;
- Both spouses agree NOT to be treated as a partnership.
Or one spouse can operate the business and hire the spouse as an employee. The negative involves payroll taxes and workers’ compensation insurance. Providing retirement planning benefits and tax considerations such as travel expenses are a plus.
The bottom line is, if you are going into business with your partner, married or not, hire an attorney to help you craft the nature of the business relationship, formalize your roles and responsibilities, fiscal matters and succession or dissolution planning.