You've chosen a life partner and are married. You may be asking yourself, is it wise to make my spouse my business partner? The answer could be yes. You would want to be sure to have a game plan in place. Good communication would also be necessary to balance the commitments of your marriage and business. Real estate investing as a married couple can be a very rewarding and lucrative endeavor.
In this article, we discuss:
Keep reading to develop a solid plan that safeguards your marriage and business.
First, let's talk about why operating a business that involves real estate investing as a married couple is a good idea:
You and your spouse will share financial goals in your business. For instance, there will not be interoffice politics to navigate, and you will both work to secure your financial freedom.
Working with someone you trust, like your spouse, there is also peace of mind. Since you trust your spouse, the business will benefit from your stability and commitment to your marriage and the company.
Before you dive into a real estate business with your spouse, you should discuss:
After you answer these questions with your spouse, make sure to write your decisions down. Having these agreements in writing protects both of you in the event of:
No one wants to think about the bad things that can happen in a marriage, but those adverse events have ramifications for your business. That's why it's essential to have plans "just in case" different types of scenarios occur.
In general, the IRS allows for four different types of business structures:
Did you decide that only one spouse will be an owner? You might choose to create a sole proprietorship or a single-member LLC.
Are both you and your spouse going to be owners? You will most likely choose either a partnership, LLC, or a corporation.
The following conditions must be met to be a sole proprietorship:
Taxes on a sole proprietorship, each spouse must file:
Considerations for running your business as a sole proprietorship:
If you want more detailed information about this business structure, check out our article, "Can My Husband And I Own Our Business Together As A Sole Proprietorship?"
Typically a partnership:
Taxes on a partnership:
Considerations for running your business as a partnership:
Read up on how a Limited Partnership can structure your real estate and other business deals in "Limited Partnership for Real Estate Investors" to see if this structure will work for you.
You will want to check your Secretary of State web page for more details, but in general, to form an LLC:
Taxes on an LLC:
Considerations for running your business as an LLC:
If you want to learn more about how LLCs protect you, your spouse, and your assets, read "What Are The Different LLC Types USe By Real Estate Investors?"
This business structure is a separate entity from either your or your spouse. In general, a corporation:
Taxes on a corporation:
Considerations for running your business as a corporation:
Real estate investing as a married couple can be a massive advantage for both of you. You can secure your financial future together and reduce your tax burden. However, it's essential to know how to maximize your savings as a real estate investor.
For more information about how to keep more of your hard-earned money, read the following articles:
Consider attending our FREE weekly group mentoring calls if you are just starting with real estate investing as a married couple. During these calls, we discuss topics such as: how to best structure your business, how to protect your assets, what tax savings you can take advantage of, and more. Join us for Royal Investing, Wednesdays at 12:30 p.m. EST by Registering Today.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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