My business is set up as a sole proprietorship.It is an auto body shop.I got offered a deal I could not refuse and a couple of friends who are auto body collision techs who said that they would work for me.My husband has been working in this kind of business for years and well respected in the community for his honestly and good work. He did not have as much faith as I had,because of the economy being the way it is. Of course, being the independant person that I have always been, I decided to go for it anyway.He has been kind enough to be there and give me some pointers on how I should run it. But now he can see that it is really staring to take off and become very lucrative. He wants to come work for me now, and I want him to, but we don't know how to go about it.Do I have to file paperwork for him and pay him workers comp ane all the other legalities I had to do with the other employees?We usually file jointly.
Thankyou for you interest. I really need help to figure this out.
I'm not entirely sure what happened to my first response.
Anyway, if you are currently classifed as a sole proprietorship, you can add your husband as a "partner" without having to actually file as a partnership. You can simply put all of the business income and expenses on the schedule C you file jointly. I.e.-you only need to file one schedule C if you file jointly. Therefore, you don't have to pay him a salary and the payroll taxes that go with it. And you also do not have to file a partnership return. Remember, you still do have to pay FICA taxes on schedule C income-15.3% (or less depending on total income).
Very good question. and tough situation. He is either a employee or a partner. either way u will be supporting him. Your incomes will merge when u file joint. I think u shlod hire him as an employee because then u are the boss. His ins and w/c and SS are good things because if he is hurt hes covered and when he gets old he will have good retirement. ON the other hand I think u don't need him to be successful and if he gets a job somewhere else, u will still have the family income and u can deduct his taxes on your sch "C" and otherr medical deductions on sch "A" . If he has another job and u need extra help put him on as sub contractor (by the job, part time and give him a 1099. It still winds up on your and his joint 1040. sonny
Thank you for your answer.Iv'e thought about all of those things and your right it is a tough question and a tough decision. I honestly know that he will make the business more successful because he has loads of customers who will follow him wherever he goes. I know it will be a good move to have him at the business.All that he is really wants to do is build the business together with me, and I agree.Can he just be my partner legally without being on the business license or without making it an LLC.He doesn't mind if he's not on the license.We have been married for years so we really do trust each other and he trusts me to be fair and not bail out on him. But is it ok to just have him there without reporting him as an employee and having to do all the paperwork that I had to do with the other guys. Is is legal if he is not on the business license.Like I said he just wants to help build the business with me. He already has enough Social Security built up. He has worked hard all of his life.I know that together we could really make it a more successful and lucrative business.The profits all go in the same pot anyway. I just don't want to do anything wrong and get in trouble with the agencies that you have to report to when you have other people working for you.Can I get into trouble for having him there without filing out paper work?As far as taxes go, whatever we have to pay or whatever we get back is for both of us anyway.So what do you think?? Again, Thank you so much for your interest and good advice.
If the OP kept it set up as a sole proprietorship (or co-sole proprietorship) workers compensation insurance isn't required. However, most states will still allow him to be covered by Workers Comp even if he's not an employee.