Creating a co-sole proprietorship in California?

Asked over 4 years ago - Escondido, CA

How do I go about adding my wife to my existing California sole proprietorship, to create a co-sole proprietorship?

Attorney answers (3)

  1. Bruce Leonard Beal

    Contributor Level 9

    Answered . Actually, in California a husband and wife can be classified as a sole proprietorship for state tax purposes, although registered domestic partners must be classified as a partnership. Similarly, the IRS (Revenue Procedure 2002-69) officially states that you can treat your husband and wife business as a sole proprietorship for federal tax purposes.

    As a result, you can report all your business income and expenses on Schedule C of your Form 1040, rather than a complicated 1065 with Schedule K-1s. There are other tax advantages, so consult your tax advisor.

    You don't need to file legal forms to obtain a sole proprietorship, other than a locally required business license or a fictitious name, if you do not use your real names.

    Proviso: My response does not constitute legal advice, as I do not know all of the relevant facts of your case, and I do not legally represent you. Although I strive to make sure the information I provide is generally accurate and useful, you should promptly consult an able lawyer who can learn the unique details of your case more completely in a confidential relationship to ensure that the information I provide, and your interpretation of it, is appropriate to your particular situation.

  2. Steven Alan Fink

    Contributor Level 20

    Answered . No such legal entity. Your wife has a community property interest in business anyway. You can add her to bank accounts, credit cards, etc. without a formal ownership. You can also form a corporation or LLC to protect personal assets from liability and give you some tax advantages and more credit. She can own half of corp or LLC formally.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.

  3. Dana Howard Shultz

    Contributor Level 20

    Answered . I agree with Mr. Fink's answer and would like to add the following:

    It is not clear what you want to accomplish. Two individuals who simply decide to work together on a business, sharing profits, create a partnership - please see the first link below.

    If you want to establish limited personal liability, the post at the second link below can help you choose between a limited liability company and a corporation.

    Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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