Basic Training: The ‘T’ Word

Posted on March 8, 2015 in Money & Finance

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Oh . . . it’s not what you think it is. This week’s “T” word is TAX. 🙂

Q.: How do I file a business tax return if I am married? I am starting a consulting business (LLC) with my sister; however, I plan to get married in the near future and I am concerned about how owning a business will affect my tax return when my future husband and I file a joint return.

A.: When you file a tax return with your husband, you will report the income you earned from the LLC (and the expenses attributable to you) on your Schedule C. Your accountant can sort that out for you easily. A bigger issue is whether you have a business ownership agreement with your sister, and whether your husband will be entitled to your share of the business in the event of a divorce or your death. Especially with family and friends, these kinds of legalities cannot be taken lightly. Run–don’t walk–to a reputable business attorney to get these issues straightened out before your marriage, as you’ll also want to address them in the context of a prenuptial agreement.

Q.: I have a tax ID. number and I want to rent a space for my business, but I can’t afford a typical office space so I was wondering if it is feasible to rent a residential space for my business with my tax ID number. If so, what would I need to have in order to do so without much difficulty?

A.: Real estate is zoned for particular purposes. A landlord would not be allowed to rent you a residential space knowing you intended to use it exclusively for a business purpose. Your business tax ID number (also called an employer identification number, or EIN) is meant to help the business develop an identity (and credit) of its own. Rather than playing games with improper uses of premises, try investigating the many virtual office space/share office space companies that abound. You can probably find something a lot more economical than building out traditional office space.

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