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I am a sole proprietor (private counseling practice). My husband

I am a sole proprietor...
I am a sole proprietor (private counseling practice). My husband is uncomfortable not being able to see what I make and how it is spent. I would like to make him a joint owner on my accounts (he does not operate or provide services to the business in any way, shape, or form -- he works for a corporation). I would also like him to have a debit card for emergencies. Is there any tax consequence to this move? We would continue to properly label expenses as business or personal. The bank accounts are not classified as business accounts, they're just a personal checking and a savings account kept separately for the business.
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Answered in 3 minutes by:
9/21/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

Making your husband a joint owner on business accounts will not create a tax liability

Megan C :

You are free to add him to the business accounts, and so long as he's not an owner of the business then you do not have to worry about being classified as a partnership or anything.

Megan C :

It's common for businesses to have signers on account that are not owner.

Megan C :

owners

Customer:

So what is the difference between being the business owner and an account owner?

Megan C :

Well, if you are a business owner you have an ownership interest in the actual business. AN authorized signer is just someone who can write checks and bank on behalf of the company ... but isn't an owner

Customer:

How does the IRS distinguish? Is it that I have the EIN number that is tied to my SSN? (Although I file a schedule C with my SSN).

Megan C :

Just because you are a signer on account doesn't make you an owner

Megan C :

The IRS distinguishes based on the type of return that you file. If you file a schedule C you are a sole proprietor

Customer:

OK. So if I file a schedule C and tell them that I have been conducting business but Brian hasn't, they accept that.

Megan C :

Yes, that is correct.

Customer:

OK got it. But because we are married, he is still jointly liable for my business debts since I am not incorporated, right?

Megan C :

Not unless he cosigns for the debt

Megan C :

You aren't personally liable for your spouses debts

Customer:

Wow, really? Even in a community property state?

Megan C :

Oh, not in a community property state

Megan C :

Community property states are different. I didn't catch you were in Washington until now, sorry about that

Customer:

No worries. Just checking. I have malpractice insurance and I don't plan on making any major investments, so i dont think he has much to sweat.

Customer:

Thank you! That answers my questions.

Megan C :

Glad I could help.

Megan C :

If you would, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Thank you Stacie for your positive rating and generous bonus. It is greatly appreciated. Please come back and visit me any time you need a question answered. It was a pleasure working with you today.
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
16,581 Satisfied Customers
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

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