Sole Proprietorship VS General Partnership - Illinois

Discussion in 'Business of Photography' started by stacy_geske, Jul 15, 2014.

  1. I recently registered my assumed business name in Illinois. My husband's name is it on as well. Can I still operate my business as a sole proprietorship? Or do I, because of this have to operate and file taxes as a general partnership? Really all that he has in my company is his name on the assumed business name certificate, nothing else.
    Thanks!
     
  2. If you file jointly, it won't matter. Even if you file separately, I'd file on your Schedule C and forget about him.
    He has unlimited liability for your actions, unless you create a separate LLC or LLP. If either of you have significant assets outside this business, you'll want to look into some sort of Limited Liability entity to give your assets at least some protection against claims arising from business activities. At the very least, get a personal umbrella policy to cover you and your husband. That's only the first step toward protecting your assets, but it's important to have $1 million or so in coverage so that the insurance company will pay attorney fees to protect you and/or pay for a loss. (There can be business exclusions, so be certain what your policy will cover).
     
  3. However, you really also need to consult a Illinois business lawyer and a tax consultant. Or even the Illinois and Federal internal revenue services directly.
    My personal 'business' was years ago under an "associates" tag here in Illinois, and no one ever gave me any trouble so long as I filed income returns under Sched. C.
     
  4. If the two of you own a home together, you may have just put it in jeopardy (subject to being seized to pay a judgment that exceeds your insurance coverage) should someone sue you over a tort that you caused when you were working. You really should get a good local business lawyer to clean this up for you. Your potential adverse risks in a partnership with your spouse are much broader than simply tax issues. Incorporating is much less risky if you are in business with your spouse.
     

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