You and your spouse trust and respect one another, so it’s no surprise that you might think of your spouse as the ideal candidate for a business partner. While you may work well together as spouses, it’s important to consider how a business partnership could impact your family life and vice versa.
You need to make certain you have your own space, as well as plans for handling the conflicts that will inevitably arise. With a little planning and foresight, it may be possible for you to successfully start a business with your spouse, provided that you address some key issues as soon as possible.
Ensure you have adequate savings or income
Quite a few businesses fail during their first year for a variety of reasons. While you want to believe that the best will always happen when you try a new venture, you should also prepare for a worst-case scenario.
If one or both of you can continue to bring in money through outside employment during the early stages of business development, that may be the best arrangement for your family. However, if your business is complex enough to demand your full attention and time, having enough savings in place to cover your cost of living expenses for at least a year can reduce the strain on the new business to turn a profit immediately.
Formalize your business partnership with a contract
The easiest mistake to make when starting a business with your spouse is to treat your business relationship as an informal one. If issues arise in the future, the lack of formality can complicate things. By setting terms for a real business partnership and signing a contract, you create structure that can guide your business lives and help you keep them separate from your marital life. You can also outline the roles each of you will play in the company.
It’s also important that your partnership contract explore what would happen if your marriage were to dissolve or the business fails. Having succession plans in place that allow for one spouse to take over the business or that will make it easier for purchasers of the business to assume responsibility and authority will protect your company from any number of unpredictable situations.
Make sure you keep business and household assets separate
It is easy to accidentally commingle business assets with household assets, particularly if you are an entrepreneur early in the process of starting a business. When there are two spouses in the same household contributing to a new company, it is natural that a lot of their income and assets will go into the business.
Maintaining separate accounting and accounts for the business is critical to protect your personal assets from vulnerability in the event that your business fails or becomes liable to an outside party.