Forum Moderators: buckworks
Accounting and taxes are very much NOT my thing. I think the argument for being a married couple with a sole proprietorship has to do with how you are able to pay your spouse for their time. Makes me think we'd have been smarter to go that way instead of a partnership but, then again, we weren't married during the first years. I was told once, by an accountant, that switching business types after the fact can be very difficult.
Id have saved in other areas as well.
If it is you and your husband perhaps you should have a partnership agreement.
You may want to incorporate. From everything I have found, in the US the primary reason to incorporate is if you have employees or want to allow others to invest. There may be other reasons pro and con.
I assume the two of you have wills (if not, get to a lawyer's office now). The form of ownership may tie in to the question of allowing one to continue the business in the event of the death of the other. That gets too complicated for me, you need to talk to a professional about that stuff.
Things to talk about include (but are not limited to):
Liability and lawsuits,
Taxes,
Death and the ability of the survivor to contiue the business.
Legal and accounting costs.
If you are in the US you will likely see ads on the internet or elsewhere for cheap incorporations on-line or by phone. I would avoid them and see a lawyer in your town who you can meet with in person.
If in the U.S., the growing trend is to organize as a Limited Liability Company (LLC). This gives some liability shielding like a corporation but simple pass-through tax treatment like a sole proprietorship. In other words, forming an LLC with one owner (or you as a couple filing jointly) wouldn't change your tax situation.
