Tax Tip of the Week | Your Lawfully Wedded Business Partner?

This week’s article takes a look at a decision that could make or break your business—and your marriage. Going into business with your spouse comes with many unique advantages and disadvantages, and it can be hard to navigate between the two. Since you spend a lot of time together, you will have plenty of time to think over and discuss business decisions, but that work can get in the way of your relationship. This article goes through it all and offers expert opinion on how to make the most of working with your spouse.
 
-Jordan Bradstreet

The Pros and Cons of Starting a Business With Your Spouse
 
For some people, there’s nothing better than working with their best friend. But there’s such a thing as too much togetherness.
 
You’re supposed to choose a business partner just like you choose a spouse. Somebody you know well, who shares your values, whom you can trust implicitly.

So, why not just choose your spouse?

It is a choice that plenty of entrepreneurs have made—and seen great success. Both partners are fully invested in the business, full time. There is always someone to talk about the business, day or night. You have someone who understands what you’re going through at work and at home.

But a business can be all-consuming, and when both spouses are involved, it is tough to find any room for ordinary life or personal space. Couples who go into business together have to be very careful not to lose themselves entirely in the startup, or the relationship can suffer along with the business.

Here are stories and advice from entrepreneurs and experts about the pros and cons of teaming up with your spouse to run a business—for better or worse.

Pro: Understanding and support
 
For Christine and Aaron Leventhal, co-owners of FIT Studio in St. Louis Park, Minn., their mutual understanding was crucial during the pandemic.

For Aaron and Christine Leventhal, co-owners of FIT Studio in Minneapolis, working together is a major benefit of their business, and they say that the business has benefited from their working together. “When she comes into the gym in the morning, it’s the best part of my day,” Mr. Leventhal says. “I get to be with my best friend at work. Every day.”

For the Leventhals, that mutual understanding and support were crucial during the pandemic. When things were at their most critical, they could recognize the signals that the other was flagging and hand off the baton. “Early on, Minneapolis had a complete shutdown, and we were in sort of a free fall wondering, what will we do for a living now?” Mr. Leventhal says. “I can’t imagine going through that on my own. But she pointed me in the right direction every day.”

During the pandemic, the couple was committed to doing everything they could to keep the business running. They switched to Zoom classes immediately, started their days at 5 a.m. and applied for PPP loans. “When you’re going through something really challenging, it’s a little easier to navigate when you know someone inside and out,” says Christine Leventhal.

It is the kind of experience that Jill Perry-Smith, professor of organization and management at Emory University’s Goizueta Business School, has seen in her studies on the intersection of work and family roles.

“Working with people we are very close to and have intimate knowledge of their thinking can be very helpful in execution,” she says. “When a crisis comes up, they are able to move forward in lockstep quickly because they understand each other.”

Con: Too much togetherness

But there are definitely dangers with having everything—and everyone—important at work and at home woven together.

“You want your spouse to be in a safe place away from the stress of work,” says Aron Starosta, who advises entrepreneurs and works with a startup accelerator at the University City Science Center in Philadelphia. “If you’re partnering with a friend, you don’t have to stare at them in bed every night. A spouse, you do.”

Another issue: While being in sync with your partner can be a big advantage, being too in sync may mean missing out on possibilities.

“While couples may have a great execution advantage, the disadvantage might be that they are too insular in their thinking,” Prof. Perry-Smith says.

“Entrepreneurs need to be exposed to people who think differently. And strangers have a great way of asking different questions or framing the problem differently. This is particularly important at the idea generation stage.”

To avoid the insularity of working with a spouse—and defuse some of the tension that can arise when there’s spousal disagreement—experts and married business partners recommend bringing someone else into the business as soon as it is practical. For one, it provides a sounding board and a different set of experiences from outside the household. And perhaps more important, that third voice can act as a referee or the tiebreaker vote if necessary.

It also helps when partners clearly delineate functions. When the Leventhals started their gym and private training business 20 years ago, Ms. Leventhal focused on the business side of the gym while home with their four young children, and Mr. Leventhal ran the operations side—classes, training and coaching. When she eventually transitioned to working at the gym alongside Mr. Leventhal and the rest of the staff, it was an adjustment.

“I was coming into his space, his gym, not mine,” says Ms. Leventhal. Then she carved out her own niche, focusing on training and teaching postpartum women about fitness and nutrition. “Now I feel like it’s our place together.”

Pro: Work-life balance

When business partners have the same understanding about what’s needed at home and at work, it makes work-life balance a lot easier to achieve. If someone needs to leave early to watch a dance recital or come in late to take a parent to a doctor’s appointment, there is no explanation or apprehension needed—like there might be if an outside partner or boss were involved.

For Ellen Thompson and Larry Portnoff, who started a small business when the two were married, that meant that the family and the business could both be the No. 1 priority. No explanations needed. “Our son was a very little person when we started the business, and as a couple working together, we had so much flexibility in prioritizing our time,” says Ms. Thompson, who still runs Respage, a software platform serving the apartment-rental market, with her now ex-husband.

Con: No boundaries

But once again, there’s a double-edged sword: The work-life integration that brings flexibility can also bring, well, too much integration. If it’s easy to address a family matter during the workday, then it’s also easy for work to creep into family time and home life. Always being with your business partner might mean that the business follows you to the breakfast table, the soccer sideline and date night.

To ease the tension, experts recommend that couples carve out physical space for the business early on. If they are sharing the bed and the dining-room table, they should designate a separate space—preferably off-site—that is just for business. In the same way that families and couples had to demarcate their own spaces during the height of the pandemic, married business partners need space from home and each other.
 
Natalie Busch—who owns TiScrubs in Kansas City, Mo., with her husband, Bill—decided she needed working space outside the home.

“We started out of the home, but eventually realized I needed to go someplace,” says Natalie Busch, who started a dental-scrubs company with her husband in 2012. “If I was investing all of my time in the business, it was important not to let myself be distracted by things at home.”

First, that space away from home was just a corner in her husband Bill Busch’s office—where he runs a dental charity to deliver care to underserved children in Kansas City, Mo. Now their startup, TiScrubs, has its own space—just across the alley from Dr. Busch’s dental practice. “He pops over all the time with new ideas,” Ms. Busch says. “And sometimes I just have to send him right back to his office.”

Maintaining boundaries between home and work is especially important if there are children involved. Seeing Mom and Dad absorbed in work at home all the time might make children perceive that they are not a priority.

“Home doesn’t go to work, but work definitely comes home. Constantly,” says Mr. Leventhal. “We try to put boundaries around it. If it’s the end of the month, I’ll take the kids while Christine focuses on closing the books.” The Leventhal children sometimes put a freeze on business talk at home, says Ms. Leventhal.

Pro: A stable business

Covid-19 and the global pandemic brought many small businesses to their knees, forcing owners and partners to expose themselves and their weaknesses like never before. For Joanne and Charles Teichman, crisis was nothing new. The couple, who started selling designer jewelry from their Dallas storefront Ylang 23 and world-wide online since 2000, had weathered a Texas oil crisis, a stock-market crash and 9/11. “We didn’t know if we’d survive,” says Ms. Teichman. “But we were in it together, and we always came through stronger as a couple.”

Joanne Teichman, of Ylang 23 in Dallas, says that while weathering disasters with her husband, Charles, “we always came through stronger as a couple.”

For his part, Mr. Teichman says joining with a spouse can allow for more compassion in the office. “No matter what happens at work, I’m not going to fire my wife, and she’s not going to divorce me,” he says.

Similarly, the Busches feel like their commitment to each other feeds their commitment to the rest of their employees. “Letting them down is not an option,” says Dr. Busch. “We know that eight mouths are depending solely on this business.” And that conviction can work both ways. “Knowing Bill and I are in it together gives the employees a sense of security,” says Ms. Busch. “They know the financial resources will be there, and they feel like part of the family.”

The Teichmans were committed not only to their jewelry business surviving the pandemic, but also to keeping all 15 employees and not making any cuts in salaries or benefits. And in turn, they wanted the team committed to the business. “We were more transparent than we had ever been,” says Ms. Teichman. “We wanted everyone to understand what is on the line. The business is on the line.”

Con: No cushion

Having a couple committed to a business, however, can at times make things less financially stable if all of the family’s eggs are in the same small-business basket. Many small businesses fail, while others can take years to get off the ground and start turning a profit. So, it helps to have one stable job in the relationship—or at least a reliable side gig—to pay for food and rent while the business is getting up and running.

What’s more, business survival can fall prey to divorce—something other companies generally don’t have to worry about. A prenuptial agreement can help with that, so that the business can succeed even when the marriage doesn’t.

Still, in the end, the best advice for couples thinking about going into business together may come from Mr. Teichman, who has been in business with his wife for over 35 years. “Go for it,” he says. “But give each other grace that if it doesn’t work, you still love each other and have a life together.”

Credit Given to: Molly Baker. Published May 1, 2022 in the Wall Street Journal.
 
Thank you for all of your questions, comments and suggestions for future topics. As always, they are much appreciated. We also welcome and appreciate anyone who wishes to write a Tax Tip of the Week for our consideration. We may be reached in our Dayton office at 937-436-3133 or in our Xenia office at 937-372-3504. Or, visit our website.
 
This Week’s Author, Jordan Bradstreet