Husband and Wife Home Business

by Linda

Sole Proprietorship vs. Partnership

Sole Proprietorship vs. Partnership

My husband and I are building a home based business together.


Some income coming in is in his name and some is in my name. For example ... from various affiliate programs.

Are we considered a partnership and if so, do we need to register as a partnership? Or do we file separate income tax returns. What's the best way to handle this?


Thanks,

Linda



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Without doing any research on the topic, my preference is to either:

(1) run two separate sole proprietorships making it okay to have revenue coming in under an individual's name; or

(2) do business (receive income) under the entity's (partnership) name.

You need to decide what your business structure is prior to doing your books and before you register the business(es) with your province.

I've put this in the Unanswered Bookkeeping Questions where maybe other bookkeepers will weigh in with their opinion.





P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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Partnership
by: Linda

Thank you...

So I'd have to have two separate books if we don't register as a partnership right?

The problem is, later on we'll likely incorporate so I was hoping we could skip the partnership step as I heard it's difficult and expensive to change a partnership to a corporation. Is that true?

Thank you so much for your quick response to my earlier question.

Linda



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Yes Linda, each business has to have their own set of books.
Legal Structures
by: Green Owl Consulting

Please keep in mind that the below information should not be taken as legal advice. I strongly recommend consulting your accountant, legal counsel, local laws and regulations, and any other appropriate channels.

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If you want to be able to accept payments in either name, then registering as two separate Sole Proprietorships makes the most sense. If you form a Partnership, you'll have to register and accept payments under the Partnership's name.

You can incorporate the Partnership later if you choose, but the rules and requirements of doing this vary by location. Where are you located?

Generally, you'll likely have to dissolve the Partnership and form a new entity as an LLC (or whatever form you prefer).

But again, you should figure out the laws that apply to your situation and speak to a hired professional.

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