3 key issues to address when starting a business with a spouse

On Behalf of | Feb 3, 2025 | Business Formation

Married couples often refer to one another as their partners. In some cases, they may actually become business partners. The decision to start a business together can help spouses monetize their skills, social connections or education.

They can theoretically provide their families with a higher standard of living and have more control over their schedules if the business is successful. Spouses may trust in the strength of their relationship and the positive dynamic that they have developed with one another. However, the stress of running a business can do real damage to relationships.

It is therefore crucial for spouses to approach shared business development with the right attitude. Spouses typically need to discuss specific issues ahead of time to prevent them from causing damage to their relationship or the business in the future.

Expectations for contributions

Unmet expectations can cause resentment. Business partners sometimes have unrealistic ideas about what they or their partner may need to contribute to the business they start together. The failure to clarify expectations ahead of time can lead to unfulfilled business responsibilities and relationship damage. Spouses need to be very clear about what the role of each party is during the startup stage and once the business has stabilized.

Standards for income and profit sharing

Just because spouses technically share their income and assets does not mean that they can ignore compensation matters when working together. Each spouse should have a clear understanding of what kind of pay they should receive and also how they can share in the profits generated by the company they start together. Particularly in scenarios where one spouse may perform critical job tasks such as client consultations or HVAC repairs while the other performs more general tasks, establishing fair compensation arrangements can prevent the situation from becoming unfair and imbalanced.

Rules for buyouts and company closure

Partners establishing new businesses together frequently include clauses outlining what would happen in a buyout scenario. They may also establish clear standards for when they may close the company because it is not profitable or when they might consider selling the business to an outside investor. Clarifying those standards ahead of time can prevent scenarios in which issues with the business or the marriage result in the company falling apart because the spouses can’t reach an agreement about how to handle the matter.

Anytime people turn a personal relationship into a professional one, clear contracts are typically necessary. Spouses intending to start businesses together may need help drafting business formation documents and contracts that protect themselves and their companies, and that’s okay.

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