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Combining wife and husband's consulting businesses

Mu husband is a principal in an ESOP owned business (architectural services); this is our primary source of income. He also does design review for a former client (with the business's knowledge) as a courtesy to the former client; he gets paid a fee for each review. I have had a sole proprietorship business, photography services, for several years. For 2019, I will have very little income due to a back injury. In addition, I had a loss in 2018 due to a stroke (I know, unfortunate, but I'm doing better...) Is it possible to combine our two businesses, for 2019,  under a single header, as either a partnership or a sole proprietorship with a consultant, so that our income and costs balance out somewhat? Otherwise I will have a significant (to me, we're talking in the $10,000 range) loss, due to ongoing basic costs of maintaining a business presence. Each month that has passed I had hoped to be able to resume photography business activities, but now at the end of the year I've realized that's just not going to happen...I'm also considering variations to my previous types of photography services, which involved a good deal of physical activity, perhaps offering writing services to related businesses. I may or may not find that these activities fall under the previous heading of photography services. In previous years I have included a separate Schedule C for each of us. We are located in California, and file a joint 1040. I have considered forming an LLC but am unsure whether this is the most logical choice, or if that course of action would create unnecessary complications. Thank you for your input.

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5 Replies

Combining wife and husband's consulting businesses

No ... you should not merge the 2 business ... you should each keep the one you have even if one will be a loss because on the tax return the 2 business incomes are netted against each other automatically.   As long as your business has life you will continue to file a Sch C for it.   It makes no economic sense for you to combine the efforts and it is not allowed.  Forming a partnership requires extra paperwork and costs and will net you nothing in the end.    Seek local professional advice before doing anything differently especially since you are in CA. 

Anonymous
Not applicable

Combining wife and husband's consulting businesses

i agree that combining is not allowed.  but if they could, her se loss would offset his se income reducing the se tax they'll have to pay.  but again such combining would be illegal and if caught result in substantial penalties and interest besides the taxes.  

Combining wife and husband's consulting businesses

Thank you for your response.

I have been advised that were we to create an LLC that we could combine previous businesses under that umbrella. Is this not correct? Must you create the LLC first, then any subsidiary businesses?

We used a professional tax preparer/accountant for our 2018 taxes. However, I had to complete our taxes sing Turbotax, then upload all of our info through their software. It took 3x as long, cost 10x as much, and they gave us no advice as to how to lessen our 2019 tax liability, although we asked many questions. How do I select a professional in the future? This one came highly recommended.

Combining wife and husband's consulting businesses

Huh?  How did you do 2018?  Paid preparers can not use Turbo Tax.  Turbo Tax is only for self prepared returns.  What did they have you do? Why did you have to use Turbo Tax?

Combining wife and husband's consulting businesses

An option for using the accountant was for us to upload all our info to their software; otherwise I would have had to pay their hourly fee to have their staff do it. Since I had already set up our Turbotax file, it seemed redundant to pay someone to redo my work - so I went step by step transferring the info from my Turbotax file to their software. I also wanted to check whether there was an advantage to using the accountant over Turbotax. As far as I could see, there was no advantage to us.

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