Article Date:
June 2012

Word Count:



Legal Structure to Save Taxes for the Husband-and-Wife Business (Part 2 of 2)

In Part 1, you learned how you can gain significant tax savings by operating your business as a proprietorship and hiring your spouse.


Here, in Part 2, you will learn how to achieve tax-favored status so that you and your spouse can work together and pocket the significant tax savings we discussed in Part 1.


To make this happen, you may have to take steps to avoid both the dreaded partnership classification and the husband-and-wife qualified joint venture classification.


The Do-Nothing Problem


If you don’t make a plan for husband-and-wife participation in the business, you could suffer from the partnership rules that deny fringe benefits to you and your spouse and increase your combined self-employment taxes.


Therefore, don’t let the partnership rules trap and surprise you. Here are some situations that you should know about so that you don’t suffer a surprise.



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