Five Advantages of Hiring Your Spouse in Your Business
Many business owners hire their spouse into their business. It can be a great way to keep family close while also growing the business. There are several advantages to hiring your spouse as a W-2 employee, including tax benefits and increased retirement savings options. In this blog post, we will discuss the five main advantages of hiring your spouse into your business as a W-2 employee!
The first advantage of hiring your spouse as a W-2 employee is the tax benefits. When you hire your spouse as an employee, you can deduct certain business expenses incurred alongside them like business trips and business meals. If you are taking a trip and bringing them along in the capacity of an employee, then their airfare, transportation, etc. are also deductible by the business. Make sure you work with a tax professional to plan your itinerary for business trips.
The second advantage is that your spouse will be eligible for health insurance through your business. If you offer health insurance to your employees, then your spouse will be able to participate in the plan. This can save you money on premiums and out-of-pocket costs.
The third advantage is that hiring your spouse as a W-2 employee allows them to contribute to a solo 401k retirement plan. A solo 401k is a retirement savings plan with high contribution limits that is available for self-employed individuals, but you are disqualified from using this type of plan if you have employees, UNLESS the employee is a spouse. In addition, your spouse can also contribute under the plan. This can help you both save for retirement and take advantage of the high contribution limits.
The fourth advantage is that hiring your spouse as a W-2 employee can help you if you are applying for a business loan. When you apply for a business loan, the lender will often look at the financial stability of both spouses. If your spouse is employed by your business, it can show the lender that there is another source of income coming into the household. This can help increase your chances of getting approved for a loan.
The fifth and final advantage of hiring your spouse as a W-2 employee is that it can help to keep family close. If you hire your spouse into your business, they will be able to work closely with you on a daily basis. This can help to strengthen your relationship and allow you to spend more time together. It also creates a sense of appreciation for how hard each of you is working by being able to engage more frequently toward a common goal.
If you are thinking about hiring your spouse, be sure to discuss it with them and weigh all of the pros and cons before making a decision.