Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-05-2013, 04:23 PM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,417
Blog Entries: 3
Can a husband and wife operate a business as a sole proprietorship or do they need to be a partnership?

According to the IRS, "unless a business meets the requirements listed below to be a qualified joint venture, a sole proprietorship must be solely owned by one spouse, and the other spouse can work in the business as an employee. A business jointly owned and operated by a husband and wife is a partnership (and should file Form 1065 (PDF), U.S. Return of Partnership Income) unless the spouses qualify and elect to have the business be treated as a Qualified Joint Venture, or they operate their business in one of the nine community property states."

A married couple who jointly own and operate a trade or business may choose for each spouse to be treated as a sole proprietor by electing to file as a “qualified joint venture.”

Requirements for a qualified joint venture are as follows;

•The only members in the joint venture are a husband and wife who file a joint tax return,

•The trade or business is owned and operated by the spouses as co-owners (and not in the name of a state law entity such as an LLC or LLP).

•The husband and wife must each materially participate in the trade or business.

•Both spouses must elect qualified joint venture status on Form 1040 (PDF) by dividing the items of income, gain, loss, deduction, credit and expenses in accordance with their respective interests in such venture and each spouse filing with the Form 1040 a separate Schedule C (Form 1040) (PDF), Schedule C-EZ (Form 1040) (PDF), or Form 4835 (PDF) accordingly, and, if required, a separate Schedule SE (Form 1040) (PDF) to pay self-employment tax.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Sole proprietorship and 1099 conflict. Tank1911 Sole-Proprietorship 1 01-27-2013 08:34 PM
2011 Wife LLC and W2, Husband W2 czechstyle Limited Liability Company 0 02-26-2012 03:20 AM
2011 Wife LLC and W2, Husband W2 czechstyle Income 0 02-26-2012 02:56 AM
Partnership Changes To Sole Proprietorship mxmxxm Filing Requirements 0 12-16-2009 03:15 AM
Sole Proprietorship LLC jerrod Sole-Proprietorship 1 03-04-2008 11:02 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.