Married to your business partner? As far as the IRS is conserned when two people are in business together and they don’t set-up an enity with their state they are a partnership reguardless of wheather they have a written partnership agreement and need to file a partnership return on IRS form 1065.
So just want makes a business a partnership? When two or more people operate a trade or business together, share assets, profits and losses the business is a partnership, unless some other enity Corporation, LLC Limited partnership or trust has been set-up under state law. If the partners happen to be a married couple the couple may be able to make an election to treat the partnership as a Qualified Joint Venture.
Spouses may elect treatment as a qualified joint venture instead of a partnership. Where a a trade or business where is conducted by a married couple jointly and:
They are married and will file a joint return; and
…Both spouses materially participate in the trade or business; and
…Both spouses elect not to be treated as a partnership.
Spouses electing qualified joint venture status are sole proprietors for federal tax purposes. Each spouse must file a separate Schedule C to report their share of profits and losses.