Can a husband and wife run a business as a Sole Proprietor or do they need to form a Partnership?

November 01, 2007

Posted by TonyLiu

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"It is possible for either the husband or the wife to be the owner of the sole proprietor business. When only one spouse is the owner, the other spouse can work in the business as an employee. If the spouses intend to carry on the business together and share in the profits and losses, then they have formed a partnership. See Rev. Proc. 2002-69 for Special Rules for Spouses in Community States.

References:
* Publication 334, Tax Guide for Small Business: http://www.irs.gov/publications/p334/index.html
* Publication 541, Partnerships: http://www.irs.gov/publications/p541/index.html

This was taken straight from the IRS web site: http://www.irs.gov/faqs/faq12-1.html

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