Considerations When Going Into Business With a Spouse

If you’re going into business and need a business partner that you can trust, hopefully, your spouse would fit that bill. The decision as to whether to start a business with your spouse on a personal level, is one that only you and your spouse should discuss thoroughly. But there are some legal considerations as well, when you go into business with your spouse that you should consider.

Keep Business, Business

It can be hard enough to separate the personal and the business when it comes to money and finances. For example, separating business from personal assets, income or expenses, or making sure that corporate assets are titled in the company and not in your personal name. But that business-personal division and separation can be even more difficult when your husband or wife are working with you.

Private Conversations

We tend to consider things that we discuss with our spouse as being private, and they generally are (there is even legal confidentiality or privilege between husband and wife).

But if you’re talking about business affairs, those conversations may not be so private; shareholders or boards of directors or investors, may have a right to know about corporate discussions that you and your spouse have, or they might be discovered in business related litigation.

And while it can seem easy for you and your spouse to just make a decision about the direction of the company amongst yourself at the dinner table; that’s not how corporate formalities work, and those decisions may not be legal if they aren’t approved in the way that the law or your corporate documents dictate they be decided.

Confidentiality Problems

If the marriage ever does fall apart, you could have confidentiality issues; spouses may have an obligation to keep private information about the business private and confidential, and yet, in a divorce action (or any action or event which causes one spouse to leave the business), an aggrieved and upset spouse, may want to “spill the beans,” or even maliciously hurt the business by disclosing sensitive business information.

Who Does What?

You should have a clear division of which spouse does what in the business.

It can be hard enough deciding which spouse does what household chores; that division of labor gets even harder when you’re now dividing chores at work. Worse, to understand your obligations, you may want to set out, on paper, each owners’ duties and responsibilities, something that many spouses may feel uncomfortable doing.

Sexual Harassment Issues

As co-owners of a company, you and your wife set an example to the rest of your employees, as any owners of a company do. But if that example is open affection between you and your spouse, that can have unintended negative in-office consequences, even if it is a good thing personally.

The first is a tacit acceptance of open affection in the workplace, which can lead to other employees engaging in unwanted advances or touching or actions that constitute sexual harassment.

You can also create an environment that is uncomfortable to employees; so uncomfortable you could face a hostile environment harassment claim.

We can help you run your business legally and safely. Call our West Palm Beach commercial litigation attorneys at Pike & Lustig for help with your business law matter.

Source:

justice.gov/sites/default/files/eoir/legacy/2014/08/15/marital-privledge-outline.pdf