Did you know that, in the United States and other Western countries, over 90% of people get married before the age of 50? With so many people entering partnerships at the same age they’re growing their career aspirations, it’s possible for these two parts of life to intertwine. The principles of business relationships can be vastly different from those of a marriage partnership. So, when a couple decides to open a business together, it can add a burden to both dimensions of their lives. Let’s take a look at the legal ramifications that come with this choice!
Sharing Each Other’s Strengths
It may seem logical for spouses to use their talents to create a successful joint business. However, a business requires excellence in different aspects of the personality. To give one example, over 60% of companies have been increasing the amount they spend on digital marketing in this past year. If one spouse has more expertise in digital marketing than the other, they may claim that expertise to be a shared asset due to their marriage.
Selecting the Right Venture
You and your spouse may already have a product or service in mind. If not, it may be a good idea to pinpoint a talent one of you excels at (like catering, decorating, party planning, etc) and start a small business based on that. After all, according to Forbes, over 99% of the companies in the U.S. are small businesses.
Choosing Your Partnership Type
If you go into business with your spouse, you must choose the business’s structure. According to Indeed, you may open the company as a sole partnership with one spouse as an owner and the other as an employee. If you agree that both spouses should be equal owners, you could have a partnership with both parties owning an equal share. Another option would be an LLC (limited liability corporation), which can protect your individual assets in case of a lawsuit.
Filing Your Taxes – Joint or Individual?
Your income taxes may routinely be filed jointly as a couple. However, when you are in business together, filing taxes jointly takes on an additional level of liability. If one of you is found guilty of unpaid taxes or of a tax miscalculation, both of you will be held accountable. This ruling of joint responsibility will hold, even if you had nothing to do with your spouse’s decision not to pay taxes.
Protecting Your Position
When you begin your business, it will be natural to expect your personal and corporate lives will always blend positively. However, a practical-minded couple should start their partnership with an expulsion clause written into their partnership agreement. This clause would allow one partner to legally remove the other partner in the case of criminal activity. The legal terminology in this part of your partnership agreement will make your position clear if the unthinkable should occur.
Coping With a Criminal Spouse
When you love someone, you may not be able to imagine they could be involved in a crime. Unfortunately, it happens to some corporate spouses every day. When your spouse is charged with a criminal act, your best action is to contact a criminal attorney. To protect yourself and your individual assets, it’s best not to use the same attorney as your spouse.
Taking Action After Criminal Charges
Your criminal attorney will be your best guide for which actions to take. If you and your partner intend to remain in business together, it will be essential for their involvement in the company to be limited. A new partnership contract must be drafted to address the criminal charges, including a plan to prevent their criminal behavior from happening again. Sometimes, your attorney will advise you to use your expulsion clause to force your spouse to leave the business.
If you and your spouse decide to go into business together, it may be an ideal decision. The traits that make you an excellent married couple may be the key to your company’s success. However, it’s essential to consider potential legal issues for a joint business. Both spouses would be wise to protect themselves with the guidance of a commercial attorney.
