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Ways to protect yourself if you start a business with your spouse

| May 5, 2020 | Uncategorized

Getting married to someone whom you respect is invaluable. When you enjoy someone else’s company enough that you could reasonably see spending your workday with them, too — and when you trust their intellect or work ethic to help you get a business off the ground — you might decide that you want to go into business with your spouse.

Starting a new business is always a challenge, but there are specific considerations that you must think about when your business partner is also your spouse. Protecting yourself, the business and your marriage from the get-go will benefit both of you in the long run.

Don’t ever assume you are on the same page about anything

Whether the issue is the percentage of ownership interest each of you holds or the individual responsibilities you both have an obligation to fulfill, nothing should be left unaddressed.

Creating thorough documents that outline the responsibilities and obligations of each spouse, the metric by which you gauge performance for individuals and the success of your company, and even the way for you to address work-related issues when they arise, will reduce the strain starting the business puts on your marriage. It will also help ensure that both of you have the same expectations.

Create a partnership agreement that discusses worst-case scenarios

Starting a business is a lot like the early months of a marriage. The people involved often have a powerful sense of optimism. As time goes on and optimism gives way to reality, conflicts and issues could arise. You should expect there to be disagreements and pitfalls along the way.

Right now, when you are both happy and excited about this idea, it is the perfect time to discuss what happens in the event that the business fails or that your marriage ends. You should address both scenarios in your partnership agreement so that there aren’t any lingering questions regarding who will manage the business if you get divorced or how you will move forward if the business fails.

For example, deciding that one spouse should return to outside employment to reduce your risk if business income doesn’t reach a certain metric in a certain amount of time can help protect you by diversifying your income and taking pressure off of the fledgling business.

Committing the terms you agree on to writing will protect you, your spouse, your marriage and your business and will make it easier for you to adjust to the complex but potentially rewarding reality of sharing a business.