Running a Business With Your Spouse? Here's 4 Tips to help you be Successful in work and love.
Have you ever said to your spouse or significant other: "Hey, we should definitely start a business together! We know each other, love each other and trust each other. We already know what the other brings to the table so this should be easy peasy." Well, whether you've made this statement one way or another, starting a business with your significant other can present many challenges that may not be prevalent on the surface.
Think about it - just because you're compatible in your romantic relationship does not mean that you'll have a compatible working relationship.
Yes, there are many rewards and advantages to working with your spouse, but there's also risk that can seep into your relationship.
Don't get me wrong. It can be done and many people have garnered successful results with their spouse. Below, I'll share with you 4 tips which are a few of the things that set the most successful couples apart from the rest.
1. Set clear guidelines for your roles and responsibilities.
Potential conflict starts when you both try to run a business without defined roles and responsibilities. Without clear guidelines, it is inevitable that conflict will occur as each spouse seeks to do things his or her own way. It’s also extremely inefficient, fostering needless redundancy, which wastes both time and energy.
You can avoid this by dividing up 1) decision-making power, 2) tasks, 3) and responsibilities so that you both can maximize on the advantages of your strengths and personalities. When you do this, your differences help to compliment each other versus causing conflict and you can continue running a successful business.
2. Do not be afraid to enter a contract detailing your business relationship.
People tend to start business with the biggest mistake ever which is failing to clearly define the business relationship in writing. Although you may be in business with your spouse and trust them, it's imperative that you detail your business relationship in terms of responsibilities, buy-out agreements in the event the relationship ends, how the company will be valued at separation, who get's what and more.
It's imperative that all terms and conditions of your business’ ownership, operation, and dissolution be laid out properly drafted legal agreements and signed by you both in advance. Therefore, when you sit down to lay out the terms of your business agreement, if tension starts to flourish, that will be a good sign that maybe you should not go into business with your spouse.
Also, you should never rely solely on generic business agreements because business matters often involve very critical and complex matters that should have thought input from you and your spouse. Whether you need new agreements created or have existing ones that need review, we can ensure the agreements governing your business relationship are sound and current with our state’s laws. We are also here to help you navigate with ease if any of the inevitable conflicts were to arise in the process.
3. Create separate work spaces.
If you’re a newlywed, spending every waking hour with your spouse may be very enticing - a great proposition. However, in reality, it’s not healthy for any relationship, business or otherwise to spend all of their time together during long working hours and then return home to each other. This can actually weaken your bond, rather than strengthen it.
This is especially true if you’re working from home, where the lines between work and home life can get blurred to the point of vanishing altogether. To remedy this, you should consider establishing separate office spaces that give you the breathing room to develop your own work routines, without stepping on each other’s toes.
While you may not be able to afford an outside office right away, consider using a co-working office space in the meantime. These communal work environments are often fairly inexpensive and provide an opportunity to get out of the house, meet new people, and maintain your sanity.
4. Choose the correct business entity
Many business owners simply form the most popular business entity without understanding the importance of both shielding from personal liability and tax reasons. If you fail to create an alternate entity structure for your business, the law will see your business as a partnership which does not give you any benefits from liability of your personal assets and complex tax filings.
Setting up your business as a limited liability company (LLC) or S corporation might your best bet to give you more. Both structures shield your personal assets from debts and lawsuits incurred by your business. What’s more, LLCs and S corps can offer unique tax-saving benefits, possibly even a straight 20% deduction on all of your company’s qualified business income, thanks to a new provision in the 2017 Tax Cuts and Jobs Act.
That said, depending on your circumstances, an LLC or S corporation might not be the best fit for you and your spouse. There are numerous other entity options to choose from, each with their own benefits and drawbacks. We can not only help you select the right entity for your business situation, we can also assist you in maintaining the administrative formalities required of certain business entities.
Protect your business—and your marriage
It's necessary to understand the potential pitfalls, risk and rewards of going into business with you spouse. However, failing to take proper precautions can quickly create the nightmare that you didn't image thus leaving your business and marriage hanging by a thread.
Meet with us as your Business Lawyer to learn more about how to run a successful business venture with your spouse. Our trusted guidance on the legal, insurance, financial, and tax issues can help keep your business relationship—and in turn, your romantic relationship—as healthy as possible.
This article is a service of SL DeBarros Law Firm, LLC, a Business Lawyer. We offer a wide array of business legal services and can help you make the wisest business choices throughout life and in the event of your death. We also offer a Business Protection Start-Up Session or a Business Planning Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.