For Better or Worse: Husband and Wife Businesses

FOR BETTER OR WORSE: HUSBAND AND WIFE BUSINESSES MARRIAGE AND AMERICAN FAMILY BUSINESSES 2$ 50% | Family Businesses 13.6% | Small Businesses 1.2M | Owned Businesses GDP Family businesses, including those run by married CEOS, account for a Glenn Muske, an Oklahoma State According to the National Federation of University professor who spent six Independent Business, there are more years studying American family businesses, estimates that 13.6% of U.S. staggering 50% of the gross domestic than 1.2 million husband-and-wife-owned product, 35% of Fortune 500 small businesses nationwide. companies are family companies. small businesses are couple-owned. The practice of running a business as a married couple THE INS AND OUTS OF HUSBAND AND WIFE BUSINESS PARTNERSHIPS remains both popular and successful, despite some rather difficult decision-making processes. Furthermore, husband-wife teams often compromise on business objectives, opting instead for a more agreeable family life and more time spent together. ISSUES SPOUSE-OWNED BUSINESSES SHOULD CONSIDER Both spouses carrying on the trade or business One spouse employed by another • If both spouses helm the same • If a spouse is an employee and business - and share in the profits and not a partner, law requires the losses - then they may be officially employer-spouse to pay Social considered a "partnership" whether or Security and Medicare taxes for him or not they have a formal agreement her. The wages of an employed spouse stating so. are subject to income tax withholding, Social Security and Medicare taxes. • As partners, law reguires them to • However, if the second spouse has an equal say in business affairs, then a true report income in the name of both spouses as sole proprietors. "partnership" exists - and the business's income is reported separately. Enacted in 2007, the Small Business and Work Opportunity Tax Act stipulates that joint ventures of married THIS SAID... couples need not be automatically treated as a partnership for federal tax purposes. This means that each spouse accounts for his or her respective share of income or loss. Treating the husband-wife owned business as a sole proprietorship instead of a partnership venture usually results in lower tax liability. TIPS THAT WILL HELP MARRIED COUPLES WHO ARE THINKING ABOUT OPENING A HOME-BASED BUSINESS TOGETHER: ................... ........................ ..................... Set "Couple's time" away from work Establish "Me time" Have a plan if you can As business partners, you will spend When running a business from your Before starting a business together, you much of your time together. However, it's own home, it is difficult to leave work and your spouse need to be on the same important to take time for yourself, away at the office. Sticking to set office hours page in an executive and financial sense. from each other. You'll recharge and be and spending time together on the weekends should be a priority. It's important to feel comfortable with less irritable when it's time to make each person's personality-type and decisions. Win-win. responsibility. Not every couple is suited to work together. HUSBAND-AND-WIFE -OWNED BUSINESSES. HAVE LONGEVITY The average life span of a husband-and-wife- owned business is 24 years. 24 ............................. 13% survive to the 3% survive to the third generation. fourth generation. 40% survive to the second generation. 10 STARTUP TECH COMPANIES RUN BY HUSBAND- AND-WIFE CEOS CISCO VMWARE 1984 1998 Diane Greene and Bosack and Sandy Lerner Mendel Rosenblum COMPANY Bought out by EMC several years later Husband and wife Team XXXX Year Founded SIX APART MARVEL TECHNOLOGY FLICKR BEEBO 1998 2002 1995 2008 Stewart Butterfield and Catherine Fake Ben and Mena Trott Sehat Sutardja and Weili Dai Michael and Xochi Birch Acquired by Yahoo in 2005 Acquired by Yahoo in 2005 Bought out by AOL in 2008 *....................... QAD ENTERPRISE KASPERSKY SUPER MICRO CIRCLESOFT LAB COMPUTER 1981 1979 1997 1993 Eugene and Natalya Kaspersky Gerard and Diane Cerchio Pamela and Karl Lopker Charles Liang and Sara Liu intuit. QuickBooks Online Sources: networkworld.com inc.com money.cnn.com | soa.org