Tax Benefits for Husband and Wife Owned Businesses

If you’re looking to diversify your business interests and are married, a good option is to start a business with your spouse. The IRS gives husbands and wives, who file their taxes jointly, the ability to treat a joint business venture as a jointly owned sole proprietorship. It would be categorized as a “qualified joint venture” but that means the owners must exclusively be husband and wife. Also, both spouses have to “materially participate” in the business (so you can’t just list your spouse and hope to get this tax benefit).

There are many advantages to having a husband-and-wife-owned business entity. First, taxes and record keeping may be less burdensome. All you have to file is a 1040 return and each spouse fills out a separate Schedule C return based on their ownership interest, according to This is much simpler than the myriad of documents that are required for other business formations like traditional partnerships.

Another major advantage to spouse-owned businesses is that both spouses are eligible to get credit for social security taxes and Medicare coverage. When a business is owned by just one spouse, the self-employment taxes can be a financial burden for a couple. The spouse-owned business venture allows both spouses to get credit for paying social security and Medicare taxes without paying additional taxes.

For additional information about the advantages of a husband-and-wife-owned business, take the time to speak with a business formation attorney to discuss your options.