Is there any entity in which a spouse can set up a business and not involve their spouse in it?

If my husband, a contractor, sets up a business is it possible for me to be blameless for his debts, taxes, etc.?

Asked on September 22, 2015 under Business Law, New Hampshire

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, he can set up an LLC or a corporation of which he will be the sole owner and you will not even be an employee if he does that, then you personally will not be liable for his business's debts, taxes, etc. the family including himself will not be liable for business debts or obligations he will face liability for certain "fiduciary" taxes e.g. payroll withholding, sales tax, if those are not paid and the main economic impact on your family will be that whatever the business's net profit after taking out legitimate business expenses is at the end of the year, you'll have to pay income taxes on that income. 
The above is an oversimplification, and you are advised to consult in detail with an attorney, who can answer any/all questions and set the LLC or corporation up for you, but as a general matter, you can accomplish what you want, with certain small limitations or exceptions, by having an LLC or corporation. Of the two, an LLC is generally a somewhate simpler and better choice for a contractor. Do NOT set up a sole proprietoship--that offers no liability protection.


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